KUMBA IRON ORE

KUMBA IRON ORE LIMITED RESPONSIBILITY REPORT 2010 Delivering Real Excellence RESPONSIBILITY REPORT 2010 KUMBA IRON ORE Real Mining. Real People. Real Difference.

HEADLINEEXPORT SALES EARNINGS ABOUT THIS REPORT VOLUMES This report, in line with the recommendations of the King Code of Governance Principles for South Africa 2009 (King III), is the first step on our journey towards developing a fully integrated report. It addresses up and highlights Kumba Iron Ore Limited’s (Kumba) performance in 2010 in terms of its well-developed up 6106% % business strategy and its performance against a comprehensive set of factors: financial as well as social, environmental, governance and other relevant business-impacting factors. Kumba has produced its Annual to 36.1MtR14.3bn Financial Statements for 2010 and Responsibility Report for 2010 separately. By reading all three documents, the reader will gain a comprehensive understanding of Kumba’s results across all aspects of the business.

KUMBA IRON ORE KUMBA IRON ORE KUMBA IRON ORE

KUMBA IRON ORE

KUMBA IRON ORE LIMITED KUMBA IRON ORE LIMITED KUMBA IRON ORE LIMITED BOARD OF DIRECTORS’ ANNUAL REPORT 2010 ANNUAL FINANCIAL STATEMENTS 2010 RESPONSIBILITY REPORT 2010 Delivering Real Excellence Delivering Real Excellence Delivering Real Excellence

REVENUE HIGHLIGHTS up 106% • Dingleton relocation enters feasibility stage • Comprehensive disease management programme to R14.3bn in place • Skills audit across the entire company completed • Revised energy strategy and management programme adopted • Total energy consumption increased • Sishen Mine rehabilitation strategy approved by the Department of Mineral Resources (DMR) • Significant effort directed at addressing historical contamination issue

VCT UPTAKE KEY NOTES

Read more D R Board of Directors’ Annual Report 2010

5,570 F S Annual Financial Statements 2010 (89%) RESPONSIBILITY REPORT 2010 CONTENTS

4 Overview

8 Governance and management SOCIAL AND MISSION COMMUNITY 12 Chief Executive Officer’s People making DEVELOPMENT statement a difference in a SPEND 14 S&SD Committee company making chairman’s perspective a difference. R134m 16 Priority issues 18 Safety performance 20 Dingleton relocation 24 Dewatering and pollution ACCOMPLISHMENTS 26 Food security • Winner of the National Business Awards for Environment, Sustainability and Governance 30 Safety review • Best Mining Company to Work For 32 Health review

• Top Performing Company of the Year 34 Employee review • Top Businessman of the Year 38 Economic review – Chris Griffith, CEO VISION • Member of the JSE Socially Responsible 44 Social and community Kumba is a leading value- development review Investment Index adding iron ore supplier to 50 Environmental review • Excellent rating in Ernst & Young Excellence the global steel industry. in Sustainability Reporting Awards (2009) 63 Assurance report

62 Compliance, certification and incidents

64 Mining Charter scorecard

65 Environmental scorecard

66 GRI index

IBC Kumba Iron Ore administration

LTIFR increased 71% to 0.12

FATALITIES DURING 2010

To read more about our strategy visit www.angloamericankumba. THREE com/strategy A COMPANY OF NATIONAL IMPORTANCE Limpopo Mpumalanga

North West Gauteng

Free State KwaZulu-Natal

Northern Cape Kumba, a member of the global Anglo American plc Group, is a Eastern Cape leading value-adding supplier of Western Cape seaborne iron ore. In 2010 Kumba exported over 36.1Mt of superior SOUTH AFRICA iron ore to customers in a range of geographical locations around the globe including China, Japan, Korea and a number of countries in Europe and the Middle East.

IRON ORE WHERE WE OPERATE

Local – 7.0Mt CORPORATE OFFICE MINES PORT OPERATIONS Export – 36.1Mt Pretoria (South Africa) Sishen Mine Saldanha (South Africa) Kolomela Mine Qingdao (China) Thabazimbi Mine

NORTHERN CAPE PROVINCE PROFILE Key factors SISHEN MINE KOLOMELA MINE The bulk of Kumba’s iron ore production comes from Sishen Mine, which • Annual production: 41.3Mt (2010) • Waste material mined in 2010: is located at the mining town of Kathu, in the Northern Cape province of • Life-of-mine: 20 years 18.6Mt South Africa. The Northern Cape is rich in minerals, with the country’s • Ore reserves: 576.3Mt (proved) • Full production in 2013: major diamond pipes found in the Kimberley district. Sishen Mine is 9Mt per annum the biggest source of iron ore in South Africa, while the copper mine at • Life-of-mine: 28 years Okiep is one of the oldest mines in the country. Copper is also mined • Ore reserves: 118.5Mt (proved) at Springbok and Aggenys. Other minerals found in the province are asbestos, manganese, fluorspar, semi-precious stones and marble. Revenue contribution The province has fertile agricultural land and is experiencing growth in value- Initial production: added activities such as game-farming. Food production and processing for 91% towards the end of the the local and export market is also growing significantly with a focus on the first half of beneficiation and export of sea products. R35 159m Key statistics 2009: R19 473m 2012 Largest province in South Africa (372 889km2) Capital: Kimberley Responsibility • 4 215 employees and • 830 employees (at full production) Languages: 68% Afrikaans, 20.8% Setswana, factors 4 217 contractors • Employment equity: 2.5% English • HIV/AIDS prevalence rate 5.8% — HDSAs in management: 51.3% Population: 1.1 million • Employment equity: — Women in core disciplines: 19.5% HIV/AIDS prevalence rate: 16.1% — HDSAs in management: 42.4% • Social and community spend: Total labour force: 398 000 — Women in core disciplines: 10% R36.4 million Employed: 308 000 • Social and community spend: Employed in mining sector: 15 000 R77.4 million Unemployment rate: 23% Share of SA population: 2.3% Share of total SA area: 30.5% Population density: 3 people per square kilometre Gross regional product: R29.7 billion Share of total SA GDP: 2.4% Source: Stats SA 2 EXPORTS Western Europe China Japan South Korea Middle East

LIMPOPO PROVINCE PROFILE THABAZIMBI MINE Thabazimbi Mine is near the town of Thabazimbi in the Limpopo province of LOGISTICS AND SHIPPING • Annual production: 2.0Mt (2010) South Africa. Limpopo, South Africa’s northern most province, shares borders • Railed to port: 36.5Mt • Life-of-mine: 6 years with Botswana to the west, Zimbabwe to the north and Mozambique to the • Volumes loaded at the Port of Saldanha: 36.7Mt • Ore reserves: 9.0Mt (proved) east. Its rich mineral deposits include platinum group metals, iron ore, • Shipped on behalf of customers: 18.7Mt chromium, high- and middle-grade coking coal, diamonds, antimony, phosphate and copper, as well as mineral reserves like gold, emeralds, scheelite, magnetite, vermiculite, silicon and mica. Base commodities such as black granite, corundum and feldspar are also found. Mining contributes to over a fifth of the provincial economy. The province exports primary products and imports manufactured goods and services. It has a high potential for 2% development, with resources such as tourism, rain-fed agriculture, minerals 7% and abundant labour offering excellent investment opportunities.

R666m Key statistics R2 879m 2009: R543m 2009: R3 392m The fifth largest province in South Africa (125 755km2) Capital: Polokwane • 806 employees Languages: 52.1% Sesotho, 22.4% Xitsonga, • HIV/AIDS prevalence rate: 13.8% 15.9% Tshivenda • Employment equity: Population: 5.4 million — HDSAs in management: 49.3% HIV/AIDS prevalence rate: 18.5% — Women in core disciplines Total labour force: 1 260 000 including the general manager: Employed: 880 000 7.4% Employed in mining sector: 45 000 • Social and community spend: Unemployment rate: 29.5% R10.4 million Share of SA population: 10.8% Share of total SA area: 10.3% Population density: 43 people per square kilometre Gross regional product: R81.3 billion Share of total SA GDP: 6.7% Source: Stats SA 3 OVERVIEW

Kumba is one of the largest companies GRI Index Table on page 66). In the • Food security – we could have in terms of market capitalisation listed forthcoming report (2011) Kumba will chosen to disclose our efforts at on the JSE, majority owned by Anglo be disclosing performance in relation addressing education or community American plc. Trusted by government to the International Council on Mining health, but we have chosen a very and society with the extraction and and Metal’s (ICMM) ten principles for topical issue and discuss our efforts preliminary processing of iron ore, sustainable development (http://www. to address food security concerns Kumba takes this responsibility icmm.com/our-work/sustainable- in areas surrounding our operations. seriously. Its duties as a responsible development-framework). miner span mitigating its environmental ASSURANCE impact, making the workplace safe and REPORT CONTENT enhancing the socio-economic benefits Certain predetermined management What we report is distilled using three created through its work. processes and data are assured by overlapping processes: PricewaterhouseCoopers (PwC) (refer This report is one of three publications 1. Risk management page 63). PwC’s auditing process takes produced by Kumba representing an place in November comprising visits to integrated overview of its performance 2. Stakeholder engagement all operations, interviews with selected for 2010. This publication deals explicitly personnel and the review of data and 3. Material issues which surface during with safety, occupational health, reports. PwC also endorses the level of the course of business operation. environment, economic value add, compliance this report has with the GRI, in community development and human This report focuses on material issues this case a C+ reporting level. resources. It provides a comprehensive where these are concerned with safety, We acknowledge that not all of our systems, overview of performance in these areas occupational health, environment, processes and resultant data are subject as well as outlining the focus for 2011. economic value add, community to this assurance process, but we intend development and human resources refining the scope of the assurance process (see performance summaries at the REPORT COVERAGE gradually. All recommendations provided end of this report). For financial, legal through the assurance audit are reviewed The information contained in this report and mining specific issues please refer and remedied according to defined covers those operations which Kumba to the 2010 Board of Directors’ Annual action plans. operates, as follows: Kolomela Mine, Report and the 2010 Annual Financial Sishen Mine, Thabazimbi Mine, and Statements. The issues we report on are We recognise the transition towards the corporate office in Centurion. Data those which can affect our growth, value integrated reporting in the sense of the King presented in this report is for the period creation opportunities, our reputation and III Report on Corporate Governance and 1 January 2010 to 31 December 2010. our licence to operate. from 2011 will be adopting an integrated Safety data incorporates Kumba’s reporting process in the sense described in This year, in addition to the regular contractors working at the the King III Report. This will have an impact matters we discuss, we have selected aforementioned locations. Environmental on our assurance process and we will, with four issues which we believe require incidents also include contractor actions. PwC, discuss the matter and resolve an attention: These are the only two areas where appropriate methodology. We will also be contractor performance is included in • Safety – the three fatalities warrant reviewing the process whereby criteria are the report. We do discuss the supply an upfront discussion on what we identified for assurance. chain and sustainable development are doing to address safety concerns initiative, which is currently focused on at Kumba. PROVIDE US WITH FEEDBACK the empowerment status of our suppliers • Dewatering and groundwater Please email your comments to (page 42). pollution at Sishen Mine – this has Anel Marais This report does not discuss corporate received media coverage and we Manager Social and Community governance in detail other than for would like to clarify the issue and Development safety, environment and sustainable explain what we are doing. Email: [email protected] development; for a complete discussion • Proposed relocation of the Dingleton Telephone: +27 (12) 683 7203 on governance, please refer to the 2010 community – this will involve the Board of Directors’ Annual Report. relocation of a large number of people from Dingleton to Kathu. Guidance for reporting is sought from As relocation is stressful for those the GRI’s G3 Guidelines, including moving and costly for those funding aspects of the GRI Mining and Metals the exercise, it requires painstaking Sector Supplement (refer to the attention to detail.

4 Kumba Iron Ore Limited Responsibility Report 2010 Overview Kumba‘s support for agriculture is designed to address food security issues

Overview Responsibility Report 2010 Kumba Iron Ore Limited 5 SETTING THE HIGHEST STANDARDS FOR CORPORATE GOVERNANCE

GOVERNANCE page 8

Kumba’s high standards of corporate governance are applied to the leadership provided by the board in respect of safety and sustainable development, the focus of this report. The Safety and Sustainable Development Committee, the structure through which this guidance is provided, ensures that Kumba’s strategies and performance are in line with company policy and meet the high standards the company subscribes to.

MANAGEMENT page 10

The management of safety and sustainable development is implemented by focusing on the key risks facing the company. The management of risk is critical to Kumba’s success and effective management thereof supports the delivery of Kumba’s strategic safety and sustainable development objectives.

6 Kumba Iron Ore Limited Responsibility Report 2010 Governance and management Kumba’s intensive development paves the way for the Northern Cape’s prosperity

Governance and management Responsibility Report 2010 Kumba Iron Ore Limited 7 GOVERNANCE AND MANAGEMENT

Key aspects of the governance and corruption and bribery, and stance Risk management of non-financial issues are on donations to political parties, are Kumba’s risk management processes are discussed below. discussed. described on page 26 of the 2010 Board A number of structures have been of Directors’ Annual Report. GOVERNANCE constituted to manage sustainable The following key risks are relevant: This year, for the first time, we include a development within Kumba, as follows (please refer to page 6 of the 2009 review presented by the chairman of the Safety Safety and Sustainable Development Sustainable Development Review for Kumba continues to pursue its vision of (S&SD) Committee of the board (refer further information): zero harm and is committed to promoting to page 14). This committee, chaired • Sustainable Development Steering safety as a value. A significant growth in by Dolly Mokgatle, an independent Committee mining and production non-executive director, meets four times • Environmental Steering Committee volumes and a consequent increase per year and comprises three members • Transformation Steering Committee in employee and contractor numbers (Dolly Mokgatle, Allen Morgan and • Safety and Health Steering across the group increases the risk of Peter Matlare) of the board. The CEO Committee injuries. Failure to adopt high levels of and executive head of S&SD attend by • Water and Energy Steering safety management could result in a invitation but are not members of the Committee number of negative outcomes; committee. • Gamagara Steering Committee including harm to employees and The committee: • Dingleton Resettlement Steering communities that live near Kumba’s Committee and Working Group mines, fines and penalties, reputation sets the overall direction which • • Operational forums. damage, poor morale, liability to Kumba takes with respect to safety employees and third parties for injury. and sustainable development Audit As a result, Kumba has committed the • oversees the development of Kumba produces a number of reports required financial, technical and human policies and guidelines for safety and resources to deliver on its intentions. sustainable development issues regarding its non-financial performance. These are submitted to the executive Efforts to improve safety performance • reviews the policies and performance are defined and focus areas agreed of the group committee and the board. Internal controls such as audits and checks assist periodically and the effectiveness of • monitors performance in relation to in assuring the accuracy of content. interventions reviewed continuously. key indicators For example, during 2010, all mines Refer to pages 18 and 30 for • considers the implication of benchmarked themselves against the further discussion. international regulatory and technical Anglo Social Way. developments, and Environment • facilitates participation, cooperation Further assurance is provided by Anglo Mining by its extractive nature has the and consultation on key issues. Business Assurance Services (ABAS), potential to negatively impact on the which is contracted to provide audit The committee involvement in Kumba’s environment. Mitigation measures are services to ensure that all headline public reporting process will increase required for resultant negative impacts. risk actions and control measures are over the next few years. Two key issues Kumba as a responsible corporate implemented and attended to. Kumba is that the committee will be focusing on citizen endeavours to minimise, mitigate, routinely visited by ABAS. are PwC’s audit recommendations, ameliorate and where possible reverse and discussing report content with On an annual basis, Kumba provides negative impacts arising from mining the committee at an early stage in the Anglo American plc with a letter of activities. Kumba’s environmental impacts reporting process. assurance concerning its performance are associated with the following: on a range of sustainable development For a discussion on corporate • Dust generated mainly from the indicators. governance at Kumba, please refer movement of vehicles, transfer to page 78 of the Board of Directors’ For a full discussion of Kumba’s internal stations and blasting Annual Report. In particular, our codes audit function, please refer to page 84 of • Hydrocarbon contamination from of conduct and approach to ethics, the Board of Directors’ Annual Report. accidental spillages of oils or fuels

8 Kumba Iron Ore Limited Responsibility Report 2010 Governance and management Kumba’s risk management process

Establish context and scope

Understand the hazards

Communicate Identify Monitor and and consult the unwanted review events Look for changes Analyse and evaluate risks

Consider the controls/ barriers

Treat the risks using hierarchy of controls

• Dewatering of groundwater which is Plans are generated, implemented and licence conditions and reduces trust required to keep the mine safe reviewed. Refer to pages 24 and 50 for between stakeholders and the mines. • Utilisation of resources such as land, further discussion. In particular, and discussed on page 20, water and energy which are needed the proposed relocation of the Dingleton to sustain the business Social community requires considerable • Non-mineral waste generation, Kumba’s mining licences are contingent planning and commitment on the part domestic and hazardous waste on it meeting the commitments outlined of Kumba to enable the development of • Land uses on other farms reserved in its social and labour plans. These a mutually beneficial solution to issues for future mining plans have a strong social development arising from the community’s proximity • Biodiversity component and as such Kumba has to Sishen Mine. Kumba is of the opinion that South African mining companies All Kumba operations have integrated developed comprehensive processes who demonstrate commitment to environmental management systems to enable its business units to effectively impoverished rural communities through (EMS) based on the requirement of manage relationships with local direct or indirect support for poverty ISO 14001. The systems are communities and local government alleviation, education, health and so forth, spearheaded by a SHE Policy and and actively fulfil its obligations (over will be guaranteed the right to mine in supporting procedures. The EMS is and above the development work it the future. aligned to the Anglo Environmental does which is not part of the social and Way, Closure Toolbox and supporting labour plans). Failure to implement guidelines. Annual Environmental these commitments is a breach of

Governance and management Responsibility Report 2010 Kumba Iron Ore Limited 9 Employee recruitment and retention programmes to enable differentiation Policy environment Kumba relies on a skilled workforce. between workplace noise-induced Kumba Iron Ore has a number of The inability to recruit, develop and hearing loss, off-the-job noise-induced policies (available at http://www. retain appropriate skills in a labour hearing loss and other medical angloamericankumba.com/sd_ market characterised by a skills deficit, factors resulting in hearing loss and policies.php) which define its S&SD is of particular concern to the company. implementation of a corporate hearing commitments in regards safety and Failure to retain skilled employees or to conservation programme standard. sustainable development: recruit new staff may lead to increased Kumba provides antiretroviral therapy costs, interruptions to existing operations to employees with HIV/AIDS and also • Unfair Discrimination Policy and delays in developing new projects. undertakes education and awareness • Human Rights Policy A number of strategies are implemented programmes to help prevent employees • Recruitment and Selection Policy to mitigate the employee turnover risk, and their families becoming infected or • Business Integrity Principles and including attention to an appropriate spreading infection. Refer to pages 32 Performance Standards suite of reward and benefit structures, to 33. • Business Principles retention allowances for key skills, a • Environmental Management in Anglo American Policy revised housing strategy for existing MANAGEMENT employees and ongoing refinement • Climate Change Policy The Anglo Environment Way and of Kumba as an attractive employee Strategic focus • proposition. Refer to pages 34 to 37. Performance Standards Kumba’s overarching sustainable • The Anglo Social Way development focus encompasses: Occupational health • Safety, Occupational Health and Environmental Management in Anglo Occupational health risk to employees • Employee safety American Policy and contractors include noise-induced • Occupational health • Safety Way, Occupational Health hearing loss (NIHL), occupational lung • Environmental management Way and supporting standards and diseases and tuberculosis. HIV/AIDS is • Social and community development. procedures. also a threat to economic growth and Kumba’s journey model, described development. Exposure to noise and dust in its 2008 sustainable development Sustainable development is managed by are the most significant occupational report and 2009 sustainable various departments within Kumba. At health risks facing Kumba. HIV/AIDS development review (http://www. corporate office, the human resources infections, potential avian or H1N1 flu angloamericankumba.com/sd_report. department, the S&SD department, the outbreaks and failure to comply with php), still guides the company’s social and community development evolving regulatory health standards and department and the communications understanding of how it approaches adopt high levels of health management, and investor relations department are sustainable development. pose further health-related risks to responsible for implementing Kumba’s Kumba. Mitigating these risks involves Kumba aspires to be proactive with safety and sustainable development improved occupational hygiene practice regards to environmental management agenda. At the operations, similar units through the allocation of sufficient and social and community development, manage these aspects, each reporting resources (equipment, competent and resilient on safety management. directly to the general manager people, facilities and quality assurance Further discussion of each focus area is and functionally to corporate office systems), improved medical surveillance presented elsewhere in this report. departments.

Kumba’s sustainable development journey model

RESILIENT

PROACTIVE World-class performance COMPLIANT Beyond compliance, anticipating and Focus is on preventing issues compliance with REACTIVE legislation, own systems and BASIC Only responds procedures to issues Interdependent Little interest, doing the Independent minimum

Dependent

10 Kumba Iron Ore Limited Responsibility Report 2010 Governance and management The role of the corporate office with Compliance monitoring takes place development. Stakeholder engagement regards to sustainable development on a regular basis and includes routine is a critical tool which focuses company is to guide and inform management monitoring of potential impacts, action, and clarifies the importance at mine level but also to serve as a link independent legal compliance audits, stakeholders place on issues. between the mines, shareholders, engagement with regulators and Engagement includes regular interaction and stakeholders outside of the engagement at different forums. with stakeholders, with responsibilities for provinces where the mines are located. All mines have approved EMPRs as engagement shared across the company. Furthermore, the corporate office is required by the DMR. During 2010 Of course, our stakeholders include concerned with sharing best practice both Thabazimbi and Kolomela Mines employees, with whom we interact across the group, establishing common received water-use licences. through a range of media including the systems and reporting criteria, and for the Kumba intranet, publications such as auditing of performance at the mine level. Stakeholder engagement InSite, OnSite, ForeSite, Thaba Junction An important development at the end Explicit reference to stakeholder and Line of Site, CEO and General of 2010 was the appointment of a engagement underscores the Manager’s briefings, posters, flyers and safety and sustainable development importance Kumba places on interacting through various forums at the corporate executive, Mr Alex Mgadzah. Mr Mgadzah with its stakeholders. Kumba uses office and at the mines. is a member of the Kumba executive engagement to convey news about the committee. He was Vice-President company, solicit views on the company, Sustainability and Community Affairs at and as a process to resolve, plan and BHP Billiton Energy Coal South Africa implement the many facets of sustainable before joining Kumba. The appointment is indicative of the increasing importance Issues of concern to stakeholders Kumba places on safety, occupational health and the environment as well as Key issue Stakeholder Reference aligning organisational structure with Mining rights Various – media, investors, Board of Directors’ Annual Anglo American requirements. regulators Report page 5 and 11 Another important appointment was Iron ore supply to AMSA Various – media, investors, Board of Directors’ Annual regulators Report page 11 that of Ms Anel Marais as the Manager: Safety Employees, regulator Pages 18, 30 Social and Community Development, Dewatering and groundwater Media, farmers, regulator Page 24 a new position at corporate office with pollution overall responsibility for ensuring the Dingleton relocation Affected people, Northern Page 20 commitments made in the mines’ Cape government, Gamagara social and labour plans are delivered, local municipality as well as for rolling out the company’s Recruitment at Kolomela Tsantsabane local municipality Page 34 to 37 broader socio-economic development programme. Ms Marais was formerly the sustainable development manager at Sishen Mine.

Management systems and certification Kumba applies the requirements of ISO 14001 and OHSAS 18001 standards in the development and maintenance of its safety, health and environmental management systems. Kumba ensures that certification to these systems is retained on an annual basis via external appraisal conducted by independent third parties. Corrective actions stemming from these reviews are implemented by the mines to ensure continual improvement. All mines are ISO 14001 certified; Kolomela is in the final stages of developing the EMS and will conduct an internal assessment audit in 2011 to determine and rectify any gaps. External certification is planned for 2012.

Governance and management Responsibility Report 2010 Kumba Iron Ore Limited 11 DELIVERING REAL VALUE TO ALL OUR STAKEHOLDERS

Kumba’s excellent operational and financial performance results (headline earnings up 106%) are two excellent reasons to be extremely proud of the company and its employees.

CHRIS GRIFFITH Chief Executive Officer

Kumba’s excellent operational and We also did not achieve our lost-time targets. Currently, we exceed the charter financial performance results (headline injury frequency rate (LTIFR) target for targets of 40% HDSA in management earnings up 106%) are two excellent the year, which increased from 0.07 in and are very proud of the number of reasons to be extremely proud of the 2009 to 0.12 in 2010. This setback on women we employee in core disciplines, company and its employees. an otherwise exemplary performance which increased to 10.85% of the was particularly disappointing in light workforce in 2010 (women account for SAFETY of our ongoing aim of achieving zero 15.3% of the employee complement). This year we spent R138 million or On the downside, however, this harm throughout the group and the 6.8% of the salary bill, on employee performance was marred by our 42% reduction in LTIFR we achieved training and development (excluding the disappointing safety record for the year in 2009. mandatory skills development levy). and the significant challenges we face Kumba has invested significant effort regarding the residual 21.4% of the in preventing any recurrence of the We recorded only one case of noise- mining rights of Sishen Mine. unusual events which caused two of induced hearing loss, an excellent reflection of our efforts to reduce the Safety continues to be a priority these fatalities. These lapses in our safety ambient noise levels in the workplace as throughout our group. However, performance are not as a result of any well as our efforts to detect cases early regretfully, we reported three fatalities complacency on our part, or a loss of on. Similarly, we continue our efforts to at our operations in 2010, two of which focus on safety. Since 2003 we have combat the spread of HIV, and to offer were caused by highly unusual tyre achieved a 75% reduction in our LTIFR those employees who are HIV positive explosions. Our colleagues that lost and over the past year we have invested excellent treatment and support. their lives were: Mr Moses Machacha of over R132 million at Sishen Mine alone Kolomela Mine and Mr Fanie Ramalapi in engineered solutions to improve safety Dividends amounting to R162.9 million of Sishen Mine, whose deaths were the and the implementation of the fatal risk were paid to more than 5 000 employees result of tyre explosions and Mr Koos standards that will improve safety on participating in the Envision scheme (or Mashango who was fatally injured when our mines. on average R32 600 per employee). the haul truck he was driving went over a Among the many indicators I consult to berm wall at Thabazimbi Mine. EMPLOYEES measure employee satisfaction, I am We once again extend our deepest We are mindful of the requirements of particularly proud of Kumba’s low rate sympathies to the families of these the new Mining Charter regarding HDSA of turnover (3.1%) and the company colleagues and those who were affected representation, and will be focusing our winning the Best Company to Work For in by their deaths. efforts to ensure that we meet all revised the mining category.

D R For more information see page 75

12 Kumba Iron Ore Limited Responsibility Review 2010 Chief Executive Officer’s statement SOCIAL AND COMMUNITY resources. During 2010, we continued to I am looking forward to another DEVELOPMENT engage with the farmers in the vicinity of successful year on all fronts, and certainly our operations who are affected by our to an incident free 2011. During 2010 we spent R134 million on dewatering programmes. We continue implementing our social and community to extract significantly less water than development projects, including our our water-use licence allowance and social and labour plan commitments. Our use less than 50% of the amount we efforts are designed to have an impact extract, delivering all our excess water Chris Griffith and we continue to focus on education, to the surrounding communities and Chief Executive Officer health, poverty alleviation and improving the farmers who have been impacted by much needed infrastructure in the areas our dewatering and with whom we have where we work. Underpinning this agreements. spend is a coherent strategy informed by research and implemented by dedicated Hydrocarbon (primarily diesel) expertise. contamination of groundwater and soil is a key concern for Kumba. The challenges The Sishen Iron Ore Company (SIOC) we face in this area are due to historical Community Development Trust fully paid spillages and current operational for its funding of R458 million, five years activities. ahead of the forecasted period and is now the unencumbered owner of 3% of Current contamination involves soil SIOC. Dividends flowing from this share pollution, which takes place during the will be used to further socio-economic refuelling, washing and servicing of development in the areas where Kumba’s mine vehicles and haul trucks. We have employees originate. established special facilities for these activities. Previously, contaminated soil Our efforts in creating small and medium was disposed of at an authorised disposal enterprises are paying dividends. To date site. As this is not the best environmental we have facilitated the establishment option we researched other solutions and of 37 new businesses, which created having established that bioremediation 360 permanent jobs, generating was the most effective technology, we are R29 million in turnover during 2010. applying it at all our sites.

ENVIRONMENTAL The clean-up of the legacy groundwater MANAGEMENT contamination at Sishen Mine is due to be completed in March 2011 and At Kumba, we are committed to we expand further on the ongoing minimising the environmental impacts initiatives in place to contain this issue of our operations throughout their on page 24 of this report. Cut-off lives. Our commitment was recognised trenches have been constructed and when Kumba received an AANBA natural bacteria have been used to break Environmental, Social, Governance down the contaminants. As we extract (ESG) award. This award recognised the the contaminated water it is transferred company’s adherence to environmental to oil water settling ponds where it is social and corporate governance policies, treated further. Once the water is free of its active involvement in promoting ESG contaminants it is reused. policies and the example it sets for other corporations in South Africa to follow. WORD OF THANKS We systematically seek ways in which I again thank Kumba’s employees for Kumba can lessen its environmental the tremendous effort they made during impact. Reducing the amount of energy the year to make Kumba an extremely and water we use per tonne of iron successful company. Again, my thoughts ore produced is of key importance in are with the families of the three men addressing the conservation of natural who died.

Chief Executive Officer’s statement Responsibility Review 2010 Kumba Iron Ore Limited 13 DELIVERING ON OUR COMMITMENTS FOR THE LONG TERM

I am satisfied with our efforts during the year, particularly those concerning the resolution of the dewatering and groundwater pollution issues at Sishen Mine.

DOLLY MOKGATLE Chairman, S&SD Committee

This, my first communication to Kumba’s S&SD. This appointment underscores our development are reflected as company public stakeholders, is intended to give commitment to safety and sustainable strategic priorities, and how the successful the reader some perspective regarding development. Mr Mgadzah will coordinate management of these contribute to the role that the Safety and Sustainable the work of the committee to ensure its making Kumba a successful company. In Development Committee plays in efficient running. order to fulfil its role, the committee will be governing and providing strategic direction We are saddened by the death of the three considering the reports submitted by ABAS to the company in relation to safety and employees in the company. Our sympathies and PwC as these pertain to safety and sustainable development. are with the families for their loss. I am sustainable development. The committee, comprising three concerned at the loss of life and will be I endorse the increased role the S&SD independent non-executive directors, overseeing at a board level a concerted Committee will play in Kumba’s reporting meets three to four times per annum. In effort to bring about the company’s zero process. The committee is mindful of the addition to the committee members, the harm objective. importance that responsible companies like CEO, the executive head of S&SD and the The committee now has before it a Kumba play in the development of South executive head of human resources attend number of proposals to increase the Africa through the leadership positions they committee meetings. At the meetings, degree to which it participates in reviewing uphold, their socio-economic development a number of Kumba departments are Kumba’s reporting process and the end spend and the employment and training represented including public affairs, products. This is considered important opportunities they afford thousands of human resources, social and community because it will ensure a greater degree of South Africans. development, the environment, health continuity between what is discussed at Finally, I am grateful for the efforts and and safety. Others may attend as required. the S&SD Committee meetings, what is dedication of Kumba’s employees and my The committee meets to discuss Kumba’s being implemented by the company and fellow committee members. I also thank the performance and discusses strategies what is then communicated to external and plans to meet targets and exceed stakeholders. This is especially important board for its support and look forward to compliance. given the new integrated reporting reporting back to Kumba’s stakeholders in requirements as discussed in the King III the next report. I am satisfied with our efforts during Report on Corporate Governance. the year, particularly those concerning the resolution of the dewatering and The committee is considering the role groundwater pollution issues at Sishen it should play in ensuring that Kumba’s Mine. I am pleased with the appointment future integrated reports convey the Dolly Mokgatle of Alex Mgadzah as executive head of extent to which safety and sustainable Chairman, S&SD Committee

D R For more information see page 75

14 Kumba Iron Ore Limited Responsibility Review 2010 S&SD Committee Chairman’s perspective Members of the surveying team at Sishen Mine

S&SD Committee Chairman’s perspective Responsibility Review 2010 Kumba Iron Ore Limited 15 FOCUSING ON REAL ISSUES SOUND RISK MANAGEMENT

PRIORITY ISSUE 1: SAFETY PERFORMANCE page 18

Safety is Kumba’s primary objective, specifically its vision of a zero harm working environment. This section discusses Kumba’s safety record for 2010 focusing on fatalities and lost-time injury frequency rate.

PRIORITY ISSUE 2: DINGLETON RELOCATION page 20

The proposed relocation of the Dingleton community due to the south-westerly expansion of the Sishen Mine pit is a complicated process which affects the lives of a number of people and for which Kumba takes considerable responsibility. The process has entered the feasibility phase.

PRIORITY ISSUE 3: DEWATERING AND POLLUTION page 24

Kumba is addressing historical contamination of soil and groundwater by implementing a range of measures including bioremediation and water treatment. Its efforts to address the impacts on local stakeholders of dewatering the Sishen Mine pit are also discussed.

PRIORITY ISSUE 4: FOOD SECURITY page 26

Kumba’s social and community development programme is involved in supporting projects that look to address issues of food security in areas where the company operates. Its involvement is in multi-partner projects where impoverished rural communities are seeking to better their lot.

16 Kumba Iron Ore Limited Responsibility Report 2010 Priority issues A large shovel at Sishen Mine – Kumba works with big equipment, addresses serious issues and plays a signifiant role in the economy

Priority issues Responsibility Report 2010 Kumba Iron Ore Limited 17 SPEND ON SAFETY PRIORITY ISSUE 1: TECHNOLOGY SAFETY PERFORMANCE R8 million

CAMERA SYSTEMS INTRODUCTION from the explosions occurred much A review of Kumba’s safety performance later while the affected tyres were being R42.5 million over the years reveals a steady repaired and inflated. The pyrolysis was improvement in performance with a not detected and therefore no danger GPS SYSTEMS limited number of fatalities. However, signs were evident. performance in 2010 went against Kumba has thoroughly investigated this trend: we had three fatalities and the incidents and is putting measures R5 million our LTIFR increased. This has led to a in place to prevent the recurrence deterioration in our performance. of such incidents. Controlling tyre RADAR SYSTEMS In the following sections, we examine operating temperature, through correct the fatalities, the increase in LTIFR and tyre selection and maintaining the R1.6 million discuss our safety focus for 2011 and operational pressure below design beyond. Further information is provided pressure, and removing tyre damaging in the safety and health reviews on pages conditions will reduce the likelihood of BUMPERS 30 and 32 of this report. pyrolysis. Sound preventative equipment maintenance, and the removal, rerouting or guarding of any electrical high voltage R28 million FATALITIES sources will reduce the likelihood of electrical contact with fixed sources and Pyrolysis FIRE SUPPRESSION subsequent potential pyrolysis type fire Two of the fatalities at Kumba were events. Nitrogen inflation may reduce caused by the explosion of haul truck the likelihood of pyrolysis. Kumba will be R1 million tyres. The cause of the explosions was piloting tyre temperature and pressure pyrolysis defined as “a thermochemical monitoring devices. In addition, the decomposition of organic material at EQUIPMENT VISIBILITY mapping and detection of overhead elevated temperatures in the absence powerlines through collision avoidance of oxygen. Pyrolysis typically occurs technology is being explored to prevent R13 million under pressure and at operating undesirable contact. temperatures above 430 °C”. According to the Queensland (Australia) Mines Fatality at Thabazimbi Mine EQUIPMENT ACCESSIBILITY Inspectorate, Safety and Health Safety Regrettably, Mr Koos Mashango was Bulletin (No. 47 of 2004) “tyres on trucks, fatally injured when the haul truck he R55 million cranes and other heavy vehicles may was driving went over a berm wall while catch fire under a range of circumstances, tipping waste material at the mine. The with the obvious potential for the tyres to investigation revealed that the truck LIGHT VEHICLES then explode. approached the berm wall at an oblique Enormous amounts of energy can angle instead of perpendicularly as be released by a tyre explosion, often required. Retraining of drivers and leading to significant equipment damage, supervisors, as well as reinforcement of serious injuries or fatalities. Pyrolysis standards has already taken place. This 2008 – 2010 FATALITIES (number) related explosions are unpredictable, was Thabazimbi Mine’s first fatality in and have occurred immediately or up eight years. 3 to 24 hours after initiation. An explosion can occur where no fire is visible and the LOST-TIME INJURY danger area can be up to 300 metres FREQUENCY RATE from the tyre.” Unfortunately, during 2010 the trend of At Sishen Mine the pyrolysis was caused improving our LTIFR reversed – missing by the vehicle being driven with a flat our target of 0.06 and achieving 0.12. 1 1 tyre which generated heat in the tyre. At Our 2010 TRCFR* is 1.24 (2009: 1.23). Kolomela Mine, the haul truck collided The LTIFR, calculated per 200 000 with an overhead power line. In both man-hours worked, is as a result of 21 2008 2009 2010 instances, a massive amount of energy lost-time injuries, 15 of which occurred built up in the tyres. The deaths resulting at Sishen Mine, five at Thabazimbi Mine

18 Kumba Iron Ore Limited Responsibility Review 2010 Priority issue 1: Safety performance and one at Kolomela. A comprehensive HIGH POTENTIAL INCIDENTS eliminating these incidents will reduce summary of our performance is shown in We measure high potential incidents the occurrence of fatalities. During 2010 the following graphics. (HPIs) – which have the potential to we recorded 56 HPIs at all operations, and mostly due to moving machinery. We attribute the reason for the increase result in a fatality but which do not – in in the rate to an influx of contractors order to learn from these such that working on the waste stripping at Sishen Mine. This fact has lead us to refocus our efforts during 2011 in ensuring alignment of contractor safety management 2002 – 2010 LOST-TIME INJURY FREQUENCY RATE systems and practices with our own. While this may not be foolproof, it will certainly give us much more comfort 0.85 knowing that our systems are being used rather than systems which we know little about and over which we have

limited control. 0.51 0.48 We have derived some comfort from a number of LTI-free runs during the year 0.29 0.12 0.23 as follows: 0.22 0.07

• Sishen Mine: > 3.3 million LTI-free 0.13 2010 man-hours. 2002 2003 2004 2005 2006 20072008 2009 • Sishen South Project: 8.6 million LTI-free man-hours. • Kolomela Mine: 1 calendar year LTI-free. 2010 MONTHLY LOST-TIME INJURY FREQUENCY RATE • Thabazimbi Mine was fatality-free for eight years until 4 Nov 2010.

SAFETY FOCUS AREAS 0.18

Kumba has four safety focus areas 0.15 0.13 0.13 0.13 0.13 for 2011: 0.13 0.12 0.12 • Fatality prevention and principle 0.11 0.11 hazard management 0.08 • Leadership and engagement • Contractor management Jan Feb March April May Jun JulAug Sep Oct Nov Dec • Learning from incidents and best practice adoption. The bedrock of safety management in Kumba is the Anglo Fatal Risk Standards 2010 HPIs (%) 2010 LTIs PER SITE (%) (http://www.angloamerican.com/aal/ 4 5 development/approach-and-policies/ 18 policies-standards-commitments/ 25 24 safety-and-health/). The standards are designed to address high-level hazards 4 71 and to eliminate or minimise the risk of 4 fatalities and injuries. They have been developed by examining industry best practice and by utilising the experience 14 32 of fatal incidents. They establish the minimum performance requirements for managing the identified fatal risks. Transportation Sishen Electricity Thabazimbi Kumba has spent significant amounts of Falling Kolomela Fire/Explosion money on implementing and installing Falling objects technological solutions for safety Moving machinery management. We believe that this money Other causes is well spent.

Priority issue 1: Safety performance Responsibility Review 2010 Kumba Iron Ore Limited 19 A view of Dingleton with Sishen Mine’s south-western dumps in the left of the frame

20 Kumba Iron Ore Limited Responsibility Review 2010 Priority issue 2: Dingleton relocation PRIORITY ISSUE 2: DINGLETON RELOCATION

OVERVIEW 3. Kumba must be convinced that the completed, including: social impact Kumba’s medium-term goal is to increase resettlement project is feasible and baseline assessment, baseline asset the iron ore production from its Northern complies with best practice for the inventory survey, environmental impact Cape operations to 50Mtpa by 2013. resettlement of communities. assessment and an economic impact This will be accomplished by the output assessment. These will inform the final from Sishen Mine’s jig plant (production GO AHEAD, OR NOT Resettlement Action Plan (RAP). of 13Mt reached in 2010) and when At the prefeasibility stage, Kumba and The feasibility phase, which began during Kolomela Mine starts production in 2012, its partners sought to investigate two the year, will see the RAP finalised and ramping up to 9Mtpa in 2013. options: approved. Simultaneously the houses At Sishen Mine, this level of production and other structures will be designed • Option 1: No resettlement option and cost estimates will be upd.ated to the will result in increased mining activity includes the upgrading of the especially in the southern and western required accuracy levels. Final tenders Dingleton infrastructure and health areas of the current open-pit. The pit will also be obtained for demolishing the and safety improvement initiatives. boundary represents the limit beyond old houses and infrastructure, for the • Option 2: Full resettlement requiring which no further mining can occur. erection of the new houses and other the construction of a new village and Legislation stipulates that no human buildings and for moving the households associated infrastructure. This option settlement is allowed within 500m of an of Dingleton to the new residences. allows for demolishing of the town open-pit boundary. and the removal of all infrastructure. The Dingleton relocation will also The township of Dingleton was be incorporated into the mine’s A project process was decided upon constructed in the 1950s by the state- Environmental Management Plan (EMP) using the International Finance owned mining company Iscor to and Social Development Plan (SDP). Corporation guidelines as a basis. At the accommodate Sishen Mine personnel. time of writing, the project is entering the During the execution phase, the RAP will The houses were sold to individuals in feasibility phase. be updated and the final compensation the early 1980s. Currently 80% of the of all affected persons resolved. The freehold properties are not owned During the prefeasibility stage, it was new houses and social structures will by Kumba. necessary to establish the degree to be erected and the community will be Mining activities close to the town which the residents of Dingleton would moved as soon as these structures are of Dingleton led to complaints from be prepared to resettle, the conditions ready. The sustainable development residents. This discontent raised an under which resettlement would appear plan will be finalised and implemented. unofficially sanctioned expectation that to be feasible and the costs associated The town of Dingleton together with all the residents would be relocated. Town with the resettlement. All the pre- related infrastructure will be demolished infrastructure is old and in disrepair. feasibility study requirements have been and the area cleared of all rubble. During 2007, in response to requests from the Dingleton community, the boards of Sishen Iron Ore Company Dingleton locality map (SIOC) and Kumba agreed in principle to investigate the feasibility of relocating Dingleton residents and the associated town infrastructure. Host town of The respective boards made it clear that Kathu the relocation would only proceed if three key requirements are met. 1. The overwhelming majority of Dingleton residents must be in favour of moving (this has been established – refer to last year’s Sustainable Dingleton Development Review). 2. Local, district and provincial governments must approve the conditions for the resettlement project.

Priority issue 2: Dingleton relocation Responsibility Review 2010 Kumba Iron Ore Limited 21 Dingleton resettlement working group action plan

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This plan was agreed upon by the DRWG and Kumba and also by the Northern Cape Government Joint Steering Committee. It was communicated to the community of Dingleton and accepted.

22 Kumba Iron Ore Limited Responsibility Report 2010 Priority issue 2: Dingleton relocation PROJECT OVERSIGHT Resettlement project team COMMITTEES The composition of the project team varies from stage to stage of the process. Resettlement Working Group During the implementation or execution The Resettlement Working Group phase, it will comprise those responsible (RWG) is the primary consultative for constructing infrastructure. forum comprising the residents of Dingleton, the Kumba project team and representatives from local and provincial PROPOSED NEW government. Its purpose is to investigate SETTLEMENT SITES the feasibility of the resettlement and to Two new sites have been identified produce a resettlement action plan. It is for resettlement. Both are in the town required to provide advice to both Kumba of Kathu. The preferred site (1 on the and the Northern Cape government. photograph) is to the south east of Kathu, All primary stakeholders are alongside the Postmasburg – Kuruman represented on the RWG. The RWG is road. Dingleton residents subsequently constituted as an advisory panel and its voted for a preferred site; the majority recommendations are not necessarily indicated a preference for site 1. binding, however, recommendations of the RWG are duly recorded and become CURRENT WORK a matter of public record. Kumba is busy with the appointment of a The RWG consists of: number of consultants to assist with the compilation of the scope of the technical • Six members from Dingleton (three work for the relocation: town planner, men and three women) architect, surveyor, electrical engineer, • At least four members from the civil engineer and demolition contractors. municipality (including two ward councillors and a technical manager) In addition, financial and legal advisors to assist residents with decision-making are • Three members from provincial government in the process of being appointed. • Two members from Kumba • The appointed consultants in an advisory capacity.

Joint Steering Committee The government, at both municipal and provincial level, has three main Dingleton – proposed new settlement sites responsibilities. The first is that of oversight; the second is to provide access to technical support where available and the third is to facilitate the process. The committee was formed from representatives of local, district and provincial governments as well as representatives from the RWG and Kumba Iron Ore. Existing town of Independent monitoring and Kathu evaluation specialist As part of this process Kumba appointed an independent consulting firm to provide monitoring and advisory support to Kumba’s Resettlement Management Committee. The consultant’s opinion is that the Resettlement Working Group’s governance during the prefeasibility phase was successful and satisfies the principles of free, prior and informed consent.

Priority issue 2: Dingleton relocation Responsibility Report 2010 Kumba Iron Ore Limited 23 PRIORITY ISSUE 3: DEWATERING AND POLLUTION

Schematic showing the groundwater treatment process

Separator Air stripper

Treated water

In situ material Structure subsoil drain Lower permeability cap (eg clay) Free phase level Water level wrapped in geofabric Coarse backfill >100mm diameter Water flow direction Free phase flow direction Water level

WHAT ARE THE ISSUES? of the farmers around Sishen Mine have water and grazing provided by the mine There are three concerns we want to been impacted and these are being to address the issue. There are still two address in this section: compensated in the form of a grazing discontented farmers with whom Sishen subsidy and provision of water from Mine is engaging. 1. Dewatering at Sishen Mine, its alternative sources. impact on local farmers, the studies The water pumped from the pit is used commissioned to clarify the issue and Kumba has appointed a full-time for mining activities as authorised by the the support we provide to affected member of staff to liaise with the affected water-use licence. Excess water is given farmers. farmers – Kumba recognises that as to the farmers, the local municipality and much as this issue is about dewatering Sedibeng Water. In addition to the water 2. Historical contamination of soil and and its impacts, it is also about people’s provided to affected farmers, Sishen Mine groundwater at Sishen Mine. livelihoods, their sense of security and the also provides two farmers with grazing 3. Dewatering and groundwater manner in which Kumba conducts itself. land and the other farmers are provided pollution. Kumba acknowledges that while the facts with a winter grazing subsidy for their may be correct, if they’re communicated livestock. During 2010, new agreements DEWATERING in an inappropriate manner, then their on grazing and water provision were negotiated. Mining and dewatering go hand in hand. meaning is lost. The Environmental The mine’s environmental management Forum was established to deal with the plan and water-use licence cater for and issue and comprises affected farmers, SOIL AND GROUNDWATER allow for dewatering. The dewatering Sishen Mine personnel, the Tshiping CONTAMINATION activities result in a cone of depression Water Users Association, consultants and There are two aspects to this that need around the dewatering wells and thus the Provincial Government Department. to be understood. Firstly, there is minor a lowering of the water levels in the This forum in turn established a technical soil contamination which results from immediate area. This impacts negatively subcommittee to focus on the technical the routine cleaning and servicing of on some landowners within the cone of issues and report to the larger forum. our vehicles and moving equipment. depression as water levels in boreholes Kumba is of the view that the majority While this is not an ideal situation, and drop such that farmers are not able to of affected farmers now understand all our mines have prevention systems cultivate and water their livestock. Some the issue and are comfortable with the in place, some contamination is

24 Kumba Iron Ore Limited Responsibility Report 2010 Priority issue 3: Dewatering and pollution unavoidable. Soil contaminated by these parts of the shallow contained aquifer In 2010 we made substantial progress activities are removed and treated using which are polluted, we constructed a in addressing these issues. Although bioremediation technology. series of subterranean drains designed more than R25 million was spent on to collect contaminated water. This With regards to current soil remediation of contaminated soils over water is then pumped and treated. The contamination, Sishen Mine the last few years, additional resources treated water is then reused in the plant. implemented a polluter pays principle to are being spent on the investigation and To deal with residual soil contamination, deter contaminating the environment as implementation of remedial actions on in situ treatment is applied where part of the overall strategy of pollution the remaining extent of the historical naturally occurring bacteria in the soil prevention. National Environmental diesel spillages. We expect to make are used to breakdown and feed on Management Act underpins the intention substantial progress on this in 2011. the remaining residues. The schematic of this approach. With the polluter pays diagram, opposite page, indicates the principle every department/section and system implemented to clean-up latent DEWATERING AND contractor responsible for contamination groundwater contamination. GROUNDWATER POLLUTION is required to pay for the soil to be There is no link between the pollution of removed and treated. At Sishen Mine there are two distinct aquifer systems – the shallow aquifer the shallow aquifer at limited and isolated The second, and more important (ranging from five to approximately locations within the Sishen mining right aspect, is what we refer to as historical 30 metres below surface in some areas) area and the dewatering issue. There is contamination referring to soil and and the deeper aquifer (about 120m in also no pollution of boreholes belonging groundwater contamination which took some areas). The two aquifer systems to those farmers affected by dewatering. place at Sishen Mine as a result of a fuel are separated by various geological Sishen Mine uses an independent pipeline which burst spilling diesel along formations which include a thick clay company to monitor the water quality the pipeline route. This contamination layer which serves as a barrier between of boreholes around the mine including does not result from the washing and the two. The limited contamination of selected boreholes on neighbouring servicing of vehicles. the shallow aquifer has not spread to the farms. The results from tests of the To deal with the pollution, the deeper aquifer due to the underlying boreholes indicate no hydrocarbon contaminated soil was removed and geology separating the shallow aquifer contamination. treated using bioremediation. For those from the deeper one.

Kumba provides farmers affected by the dewatering of the Sishen Mine pit with water

Priority issue 3: Dewatering and pollution Responsibility Report 2010 Kumba Iron Ore Limited 25 PRIORITY ISSUE 4: FOOD SECURITY

INTRODUCTION government leadership is crucial for plans. Kumba’s interventions focus on addressing the implications of the food improving local infrastructure, facilitating The United Nations identifies the food crisis, business also has a vital role to play the establishment of small and medium crisis as one of the primary overarching in partnership with others to develop and enterprises, improving education and challenges facing the international implement innovative responses.” health services, increasing community community, and nowhere is it more safety and alleviating poverty. Kumba’s pressing than in southern Africa. There Kumba’s Social and Community holistic approach to socio-economic is also an increasing awareness that Development (SCD) Department development is founded on a solid no single roleplayer can meaningfully is responsible for implementing the strategy and supported with research. It address food insecurity if acting in community development aspects of the believes that a concerted effort targeting isolation. The complex interactions mines’ social and labour plans, legally all aspects of development is to improve within and between social, economic binding commitments required by the the livelihoods of local people. and natural systems that characterise Mineral and Petroleum Resources food value chains call for better Development Act. The department’s Poverty alleviation is a key focus of communication and collaboration mandate extends beyond attending to Kumba’s SCD Department. There are between roleplayers in the state, business the social and labour plans – it supports a number of reasons as to why food and civil society sectors. According to socio-economic development in the security is an issue in the communities a recent United Nations report , more areas where Kumba’s Mines are located, where Kumba’s operations are located, attention ought to be given in particular and in labour-sending areas, beyond that and in the labour-sending areas. These to the role of the private sector: “While which is required by the social and labour include poor infrastructure, remoteness,

Members of the Kromdraai Gardening Project near Thabazimbi

26 Kumba Iron Ore Limited Responsibility Report 2010 Priority issue 4: Food security lack of access to credit, unemployment, June 2010 and implementation thereof SKEIFONTEIN HYDROPONIC drought, inferior soil for agriculture, started in mid July 2010. Since the start VEGETABLE FARMING PROJECT for example. Any of these aspects of work the main aim of the project team The project is situated in a rural part act in concert, thereby significantly was to establish vegetable production of the Tsantsabane Local Municipality exacerbating the issue. trials in at least five hectares of open field and focuses on a community who, as irrigation. In order to achieve this, the part of the South African government’s Kumba is involved in the establishment following was accomplished: of interventions that specifically land reform process, were relocated address issues of food security in rural • Installation of infrastructure to Skeifontein. Most of the young economically active population, communities. These interventions • Purchasing of equipment particularly men, migrate in search of are designed to address food security • Soil preparation and planting employment opportunities, leaving young through the creation of home vegetable • Hiring of labour children and the elderly behind. gardens and through the establishment Based on the trial cultivation results, of small scale agricultural businesses the project team also believes that The project was started by a group of which address food security issues. the findings provide valid and reliable eight women who started crop farming on land made available to them by the Kumba’s intervention in other areas also intelligence to serve as basis for the community property association. Their mitigates the risk of food insecurity. commercialisation of the endeavour. aim was to grow vegetables to provide The project team strongly believes food to families but due to a lack of that successful commercialisation will MANYEDING CULTIVATION support, it was done on a subsistence require an independent legal entity PROJECT basis and no income was derived from based on strict commercial business their endeavours. The Manyeding cultivation project is principles. Discussions with potential a fairly large-scale project situated to commercialisation funding partners Kolomela Mine, as part of its social the east of Kuruman. Initially conceived indicated that the project must be and labour plan, sought to assist as a small-scale food garden project, housed in a private company to enable these women by providing them with it now involves some 159 households funders and operating partners to take additional support to progress the who live on state-owned land and up equity in the project if so required. project beyond the subsistence level. It work collectively. Kumba is working The Manyeding community will own a was jointly decided to use hydroponic in partnership with national and local majority share in the entity. farming methods to boost production government, the latter keen to use this and increase the likelihood of the The land will be used to cultivate a project as a rolemodel for the roll out project’s success. The new approach was range of vegetables, fruits, nuts, herbs of similar projects nationwide. The first implemented in November 2008. and spices. harvest took place during the year. The project beneficiaries have been In September 2009, Kumba, government trained extensively on how to go about KROMDRAAI VEGETABLE managing the project and growing and the Manyeding community GARDEN PROJECT identified the need to establish an produce based on local demand. The The project was started in 2007 with project has had many successes and the enterprise development initiative in the assistance from the Limpopo Province women were able to supply local retailers Manyeding area, the aim being to create Department of Health and Social with some of their fresh produce. In 2010 a sustainable agricultural business that Development. The project is located on the Department of Agriculture came on will benefit the broader community a farm which the beneficiaries accessed board as a key partner. The project also through employment, skills development through the land reform process. The won two very prestigious awards: Best and economic empowerment. The project comprises ten family members Horticulture project in the Northern Cape community decided that the initiative who all reside on the farm. and Best Water Usage Project in the would consist of two key phases, Siyanda District Municipality. namely: Kumba began supporting the project in 2009. It contributed funds for the Implementation of the project was • Pilot phase: establishment of a purchase of farming equipment and completed at the end of 2010. This vegetable production unit for trial for upgrading the storage facility. The means less involvement on the part of cultivation and training purposes. farm produces pumpkins, butternuts Kolomela Mine and the municipality • Commercialisation phase: expanding and sweet potatoes. The farm also and more independence on the part of the initiative into a commercially has a few cattle, sheep and goats the beneficiaries. The Department of sustainable agribusiness. which are sold at various auctions to Agriculture will assign a representative supplement income. to mentor the beneficiaries and will offer OrganiMark, a consulting company, future support through their various was briefed by the project stakeholders Currently Kumba is looking at programmes. The project and all assets to compile a business plan for the pilot implementing a strategic plan such that will be officially handed over to the phase and manage the implementation the project can become self-sustaining, cooperative in 2012 once the project thereof. OrganiMark was appointed to moving from a subsistence initiative to a realises its full commercial potential and start the business planning process in small commercial venture. the ability to sustain itself.

Priority issue 4: Food security Responsibility Report 2010 Kumba Iron Ore Limited 27 SAFETY, HEALTH AND EMPLOYEE REVIEW

SAFETY REVIEW page 30

This section describes Kumba’s safety management process and summarises its focus areas for 2011.

HEALTH REVIEW page 32

Noise-induced hearing loss is the primary occupational health risk which Kumba’s employees and contractors are exposed to. In addition, HIV and AIDS is a key risk to the company and its employees, and is covered in some detail.

EMPLOYEE REVIEW page 34

This section captures the key drivers of Kumba’s human resources strategy and related performance. This review includes transformation, skills development and employee wellness.

28 Kumba Iron Ore Limited Responsibility Review 2010 Safety, health and employees MV Ramela, T Thubakgale and MD Peter – employees at Thabazimbi Mine

Safety, health and employees Responsibility Review 2010 Kumba Iron Ore Limited 29 SAFETY REVIEW

THE KUMBA SOLUTION Our safety performance reflected in fatalities, LTIFR and the number of Safety performance will be high potential incidents is discussed earlier in this report (refer to Priority improved by behavioural issue 1: Performance – fatalities and LTIFR, page 18). We continue to focus changes, procedural changes on improving the systems, behaviour and technology we use to reduce and preferably eliminate safety risks. Our safety and health management and innovative technological system, as illustrated below, captures the fundamental systems we solutions. have in place to manage safety. Kumba began implementing the Anglo American risk management programme in 2010. As part of this process, a ZERO significant number of employees were trained in basic risk management HARM and assessment, the aim of which was to improve hazard awareness and identification.

ELIMINATING FATAL RISKS BY APPLYING SIMPLE NON- NEGOTIABLE STANDARDS

30 Kumba Iron Ore Limited Responsibility Review 2010 Safety, health and employees Kumba’s safety and health management system

POLICY 1. Policy, leadership and commitment

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Kumba conducted Anglo Safety Way and Anglo Fatal Risks Standards (AFRS) self-assessments, the results summarised as follows:

Safety self-assessments conducted during 2010

2010 Safety Way 2010 AFRS Site Target Actual Target Actual

Sishen 75 75 100 88 Thabazimbi 75 76 100 66 Kolomela 75 73 100 87 SSP 75 67 100 67 VIU 75 37 100 98 HQ 75 98 100 40 Saldanha 75 79 100 62 Exploration 75 68 100 82 Projects 75 70 100 59 The table indicates a range of scores indicating the extent of implementation of the Anglo Safety Way and the Anglo Fatal Risk Standards. Looking ahead, Kumba’s major efforts in reducing risks will be through focusing on vehicle safety management, ensuring that contractors’ safety management is aligned with Kumba, that lessons are learned and shared, and that a culture of safety leadership is embedded throughout the organisation.

Safety, health and employees Responsibility Review 2010 Kumba Iron Ore Limited 31 HEALTH REVIEW

WELLBEING Kumba’s health management system is founded and operated Employee health and wellbeing according to the same principles as its safety management system (see needs to be considered holistically. previous schematic). Health management also focuses on processes, Recognising that employees’ behaviour and technological innovation; however, employee health is a workplace behaviour is potentially very broad term and encompasses the physical and emotional wellbeing influenced by many factors outside of Kumba’s employees. Ensuring that employees are healthy in the of the workplace, is an element broad sense of the word requires interventions at a number of levels in Kumba’s approach to human and brings together the human resources, safety and occupational resources management. health departments.

HEALTHIER A HOLISTIC VIEW OF EMPLOYEE WELLBEING WORKPLACE Fitness for work, and susceptibility to occupational health risks and diseases in general, is more than just about reducing noise and dust levels. Kumba embraces a holistic view of employee health and believes that all spheres of an employee’s life need to be considered when discussing an employee’s ability to perform his or her task. This highlights the overlap between the safety and occupational health function, and the human resources function within Kumba. Both departments are working in concert to address employee wellbeing from all angles. Kumba’s common sense view is that if all facets of an employee’s life are functional, then the risk of that employee becoming ill, or being injured, is significantly reduced.

OCCUPATIONAL DISEASES Occupational health risks stem primarily from noise and dust, with the noise being the primary hazard. Kumba has specific systems in place to reduce dust and noise levels – this year we report only one case of noise-induced hearing loss (2009: five cases) – and to detect cases of NIHL early on. This achievement was made possible through the SUBSTANCE ABUSE introduction of compulsory noisebans (a noise reducing device placed Kumba will be working earnestly in ear) for all employees working in areas with high noise levels and to address substance abuse the implementation of the Anglo American Guidelines on the proactive in the workforce. Very often identification and management of NIHL. Thabazimbi Mine successfully caused by stresses outside the rolled out the hearing conservation programme in 2010 to bring noise work environment, substance awareness to the workforce. abuse is ubiquitous and is a major cause of absenteeism and certainly increases the risk of safety incidents, especially if the employee is under the influence at work. Through the Independent Counselling and Advisory Services (ICAS) programme, employees now have a service they can use for advice and support.

32 Kumba Iron Ore Limited Responsibility Review 2010 Safety, health and employees HIV AND AIDS 2008 – 2010 HIV/AIDS MANAGEMENT DATA (%) HIV/AIDS affects close to 8% of Kumba’s workforce. Although not an occupational disease, HIV/AIDS affects the workforce directly and indirectly, and consequently our 100 91 90 89 business. We have an extensive programme designed to 84 identify those who are HIV positive, a voluntary counselling 77 and testing (VCT) programme, as well as a comprehensive wellness programme for those employees who are HIV 38 35 positive. Altogether 89% (5 570) of our employees were 34 tested during 2010. 6.9 6.7 7 84% of those employees who are HIV+ are enrolled on a VCT Prevalence DMP ART disease management programme (DMP); all of the 35% HIV positive employees with low CD4 counts, are receiving 2008 2009 antiretroviral (ARV) treatment (148 employees). 2010 The Ulysses Gogi Modise (UGM) Wellness Clinic in Kathu continues to provide a vital service to the people of the Gamagara Local Municipality. The clinic provides testing and counselling services, and ARVs. The new private community clinic in Thabazimbi is ready for occupation – Kumba financed the conversion of the building into a clinic and will fund the running of the clinic for the foreseeable future. The clinic will be managed by the same company which runs the UGM clinic in Kathu.

FATIGUE MANAGEMENT NIGHT SHIFT Employee fatigue is a major risk, especially for those employees WORK

working late shifts. As diurnal mammals, human beings are not L A E 24 hardwired to stay up all night. Thus those employees working through 23 1 M N 22 2 I N E F O A the night require extra monitoring and support to ensure that they are T 21 3 O C T A I R G P F 20 4 U not fatigued, and that if they are, that there are early warning systems F E E

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SLEEP fatigued. These practitioners also talk to employees about what’s going in their lives outside of work such that employees have the opportunity to offload and receive guidance • Sleeping facilities • Programmes for night shift employees advising them when to sleep and what to eat • Revised Bio-Roster for employees and lifestyle planners.

SELF-ASSESSMENT Health self-assessments conducted during 2010 The results of Kumba’s self- 2010 Health Way 2010 Hearing 2010 Fatigue assessment against implementation Site Target Actual Target Actual Target Actual of the Anglo Health Way, hearing Sishen 75 60 75 33 75 44 conservation standards and fatigue Thabazimbi 75 61 75 32 75 82 management requirements indicate Kolomela 75 43 75 60 75 54 that some operations have some way SSP 75 76 75 100 75 70 to go in terms of implementing these VIU 75 35 75 0 75 8 HQ 75 88 75 95 75 14 requirements completely. Saldanha 75 95 75 54 75 80 Exploration 75 52 75 96 75 74 Projects 75 30

Safety, health and employees Responsibility Review 2010 Kumba Iron Ore Limited 33 EMPLOYEE REVIEW

KUMBA’S VALUE OFFERING The engine responsible for the company’s success, Kumba’s employees are Whilst competitive remuneration the heart of the company. As a consequence, Kumba does the following: is part of Kumba’s value offering, • Expends considerable effort in recruiting employees, including a focused it is the complete offering that drive to attract and recruit employees of colour makes Kumba the best mining • Ensures that employees remain at the company by offering them company to work for. The offering competitive remuneration packages, a range of training and includes training, housing and development opportunities medical benefits, and personal and • Affords learners at secondary and tertiary education institutions the professional growth prospects. opportunity to complete their studies on Kumba’s account thus providing Kumba with the best talent from a young age These points are discussed in the following sections:

HDSAs IN MANAGEMENT PER 2007 – 2010 HDSAs IN MANAGEMENT (%) 2010 SITE (%)) 51.28 45.99 49.3 44.33 47.37 41.58 42.38 37.47

2007 2008 2009 2010 Head Sishen Thabazimbi Kolomela office Mine Mine Mine

HOUSING Following the approval of the company’s housing strategy by the board, KPMG was commissioned to conduct a study on the current operating framework and propose recommendations on an effective model to execute the company housing strategy. The conversion of hostels at Sesheng (Kathu) is on track for final completion in 2014. Four hostel blocks were converted in 2010 according to plan. Six are planned for conversion in 2013 and four blocks for conversion by 2014. The company has established temporary housing to accommodate employees during the hostel conversion process. Kolomela Mine will start with a process to relocate employees temporarily residing in the Blinklip Hostel to shared houses, to enable the mine to accommodate one employee per room as per the requirements of the Mining Charter. There is a critical shortage of accommodation in Postmasburg and surrounding areas and Kumba is doing its utmost to find suitable temporary accommodation as well as to expedite the construction of 781 houses. At Thabazimbi Mine potential housing shortfalls are avoided via rentals. Renovations to 35 of the targeted 127 company owned Ipelegeng houses was completed in 2010. The remaining Ipelegeng houses will be renovated in 2011.

34 Kumba Iron Ore Limited Responsibility Report 2010 Health, safety and employees CAREER PLANNING • Professionals in training (PIT): KEY HR FIGURES Individual development plans, based the name given to all of Kumba’s on a comprehensive skills audit, were graduate and diploma trainees compiled for all employees at Sishen participating in the PIT programme. 11 800 Mine during 2010. The other operations The PIT programme ranges from are scheduled to roll out individual 24 to 36 months depending on development plans during 2011 onwards. the professional’s discipline and TOTAL EMPLOYEE COMPLEMENT Kumba is one of the first commodity units qualification. The programme within Anglo American plc where career is structured according to the 6 400 planning is undertaken for all employees, requirements of different professional irrespective of level or skill. During bodies such as the Engineering 2011 these plans will be discussed with Council of South Africa (ECSA) to NUMBER OF PERMANENT individual employees. ensure that PIT training is relevant EMPLOYEES and discipline specific. Non-technical skills are also developed within the TRAINING AND DEVELOPMENT training period with a focus on report 5 400 Kumba is the premier trainer of mining writing, personal development and personnel in the country. Training spend management skills training. NUMBER OF CONTRACTORS for 2010 was R138 million or 6.8% • Learnerships: this is the name given of the total wage bill (2009: 5.3%; 2008: to technical vocational training. 6.0%). This amounts to R19 300 per During the year 143 students were 45.99% permanent employee or R11 240 per declared as competent technical employee if contractors are included. artisans. Of these 82% were HDSAs IN MANAGEMENT On average, each employee received trained on behalf of Kumba, and 5.8 days (46 hours) of training during the remainder for neighbouring the year. mines. During the year, there was a 31.75% noticeable increase in the number of A wide range of training is provided female learners, who represent 20% catering for all employees from the BLACKS IN MANAGEMENT of the learnership pool. executive level through to administrative • Bridging school: part of Kumba’s and support positions. Of particular social development initiative awards importance is the adult basic education 10.85% young talent with the opportunity to and training (ABET) provided to improve maths and science. A total employees. During 2010, 95 (42 at WOMEN IN CORE MINING of five students were sponsored Sishen Mine and 53 and Thabazimbi for 2010. Mine) employees were enrolled on • Bursaries: 55 students were funded Kumba’s ABET programme – ahead 15.30% through Kumba’s bursary scheme of target. Portable skills training was for various degrees at tertiary provided to 175 employees during the WOMEN EMPLOYED institutions. 25% of the bursaries year, against a target of 144. offered were to learners from labour As shown in the table below, Kumba sending areas near the mines. 0.80% supports a number of training • Community training and programmes, whether at its own facilities development: a number of short DISABLED EMPLOYEES or at other tertiary learning institutions. courses are offered at the Tshipi The support provided includes the (Kathu) and Itereleng (Thabazimbi) following: training centres. 39

Training and development statistics (2010) AVERAGE EMPLOYEE AGE

Key programme Total HDSA incl WF Female White male

Professionals in training 31 (PITs) 45 33 (73%) 9 (20%) 12 (26%) Bursars 70 55 (79%) 23 (33%) 15 (21%) CASES REFERRED TO Engineering learnerships 356 273 (77%) 70 (20%) 83 (23%) THE CCMA Other learnerships 126 118 (94%) 32 (25%) 8 (6%) Bridging school 5 5 (100%) 1 (20%) 0 (0%) 460 Students receiving technical/commercial exposure 24 20 (83%) 15 (63%) 4 (17%) DISCIPLINARY CASES Total 627 504 (80%) 152 (24%) 123 (20%) 3.1%

LABOUR TURNOVER

Health, safety and employees Responsibility Report 2010 Kumba Iron Ore Limited 35 EMPLOYEE ENGAGEMENT AND In October 2010, Kumba signed an 2010 ETHNIC PROFILE (%) WELLBEING agreement with ICAS to provide a 18 comprehensive employee wellbeing During the year, Kumba’s strategic game service to the company. ICAS will plan was explained to all employees, provide a range of advisory services covering the four pillars of its strategy 0.06 including legal advice, financial advice, as well as the new Anglo American psychological advice, assistance with branding and the significance thereof. relocating and so forth. Monitoring of Kumba’s integrated and holistic approach the service to date indicates that about 17 to human resources management 20% Kumba’s employees are using the 65 necessitates that employees understand service compared to a market average of where the company is going. This was around 8%. explained to employees at the corporate African office as well as at the operations, such Coloured that employees at each operation ATTRACT, RECRUIT AND RETAIN Indian understand the strategic focus areas White The percentage of HDSAs in globally, locally and at their specific management increased to 45.99% operations. A key objective of the during 2010 compared to 44.33% in exercise is to allow each employee PERCENTAGE WOMEN PER 2009 and 41.63% in 2008 (the Mining 2010 SITE (%) to understand their purpose and the Charter target is 40%). The percentage difference they make to the company, of HDSAs in management, excluding irrespective of the position the white women, at 31 December 2010, was employee occupies. Kumba also wants 31.75%. Despite the steady year-on-year 23.91 to increase the levels of engagement increase in the proportion of HDSAs in 20.58 with employees and the effectiveness management, recruiting, appointing and of engagement. To this end Kumba retaining HDSA candidates remains a is monitoring the success of its huge challenge. engagement strategy with a range of Recruitment of HDSA candidates with 9.63 bi-annual company-wide culture, climate experience remains a challenge, more so 7.07 and safety assessments. at the operations for a number of reasons, Accompanying the rollout of the including the remoteness of the sites. Head Sishen Thabazimbi Kolomela office Mine Mine Mine company strategy are questions posed Superimposed on this is the widespread to employees about their lives and the unavailability of skills in South Africa, quality thereof. These questions are which leads to competition for candidates designed to get employees to examine and contributes to employees changing their purpose in life, the meaning they jobs frequently. derive from work and what they would like to change in their lives. This process Our drive to recruit women into mining assists with connecting employees with disciplines (engineering, projects, and their working environment and increases mining) is paying off. The percentage of the levels of engagement between women in mining disciplines increased employees and the company. Engaged to10.85% compared with the 7.6% employees are better employees. achieved in 2009 and 5.2% in 2008. Related to this initiative is Kumba’s Overall, women comprise 15.3% of all focus on personal insight and emotional Kumba’s employees (this includes women intelligence development. During the in support and administrative roles). year, Kumba ran a number of workshops Overall, talent recruitment and retention designed to develop the emotional is an issue irrespective of colour or intelligence of the total workforce. gender.

LABOUR RELATIONS The key development from a labour relations point of view is the signing of a multi-year wage agreement with unions. The agreement is for the period 1 July 2010 to June 2012.

Union membership (2010)

National Union membership Agency Build Allied MWU Union of at Kumba Shop Mining & Con Solidarity Mineworkers Total

Number of employees 307 434 866 2 825 4 440 Percentage 6.98% 9.84% 19.50% 63.67% 100.00% There was no significant labour unrest during 2010 that resulted in production losses. In all instances of standstills, amicable solutions were found with no impact on production targets.

36 Kumba Iron Ore Limited Responsibility Report 2010 Health, safety and employees The ability to listen is an important part of being a responsible employee at Kumba

Health, safety and employees Responsibility Report 2010 Kumba Iron Ore Limited 37 ECONOMIC REVIEW

VALUE ADDED page 40

As one of the largest companies in South Africa, Kumba creates substantial value for a number for stakeholders including employees, the government, shareholders and service providers.

PROCUREMENT page 42

Developing suppliers is one of Kumba’s priorities. Kumba has a number of programmes in place designed to train local and HDSA suppliers such that they can take advantage of opportunities to supply Kumba.

ENTERPRISE DEVELOPMENT page 42

Kumba’s Social and Community Development Department coordinates the company’s enterprise development initiative in conjunction with Anglo American Zimele. The initiative is designed to support small and medium enterprises with funding, mentoring and other relevant guidance.

38 Kumba Iron Ore Limited Responsibility Review 2010 Economic review The primary crusher at Sishen Mine

Economic review Responsibility Review 2010 Kumba Iron Ore Limited 39 ECONOMIC REVIEW

operational efficiency and VALUE CREATED IN 2010 2010 VALUE CREATED (%) R28.5 billion revenue enhancement initiatives Kumba is a key employer, trainer, 8 generator of revenue, profit and stemming from our asset taxes and contributor to socio- optimisation programmes 27.8 economic development especially contributed to containing costs at our operations, which in the Northern Cape province, 23.5 but also in the Limpopo province together added R1.9 billion to and South Africa as a whole. operating profit and increasing revenue in 2010. In this section, the socio- 13.9 This value was derived from: 25.3 economic reach of Kumba is 1.5 described. This ranges from • the Start of Bokamoso the group’s value add, to black transformation programme 2009 VALUE CREATED (%) R15.7 billion economic empowerment at Sishen Mine which (BEE), including preferential delivered mining operational 8.5 11.6 procurement and HDSA efficiency gains by limiting ownership. mining cost increases (R340 million); 23.4 Some R28.5 billion (2009: 41.4 R15.7 billion; 2008: R15.6 billion; • asset optimisation initiatives 2007: R7.6 billion) of value has which saw the jig plant been created for stakeholders produce in excess of design 3.7 capacity and mitigated during this year. Our stellar 11.7 financial performance in 2010, as production challenges demand for iron ore was driven experienced at the DMS plant (R1.2 billion); and by world crude steel production 2008 VALUE CREATED (%) R15.6 billion exceeding pre-2008 levels, • our development of niche 9.5 together with continued progress lump ore products which 26.9 in our capital projects and a command premium sustained focus on operational prices in the market and professionalising our efficiencies should ensure future 24.3 growth is sustained for all our shipping operations (R368 stakeholders. million). 23.7 Cost control remains a major An additional R687 million in procurement benefits was 12 focus of the group as we face 3.6 the challenges of the cost of realised from participation in the Anglo American Supply Chain increased waste mining as we 2007 VALUE CREATED (%) R7.6 billion mine deeper. Cost management, procurement organisation 15.1

39.5 17.9

10.9 11.4 5.3

Employees (including employees’ tax) Shareholders of Kumba Iron Ore Minority interests Providers of loan capital Governments – direct taxes Reinvested in the group

40 Kumba Iron Ore Limited Responsibility Report 2010 Economic review A successful taxation system balances government’s need to raise revenues for its The group’s strong cash flow generation citizens, with the desire to attract and maintain investment, generate jobs, wealth and enabled the consistent payment of an an entrepreneurial spirit. It is important to note that our contribution goes beyond interim and final dividend since its listing the corporate income tax paid by a company on its profits. A company’s tax footprint on the JSE Limited in November 2006. includes corporate income tax, royalties, withholding taxes, payroll taxes, VAT, import The capital and substantial dividend and export duties. The taxes and royalties borne by Kumba amounted to R8.4 billion in cash returns has resulted in the SIOC 2010, including normal tax and secondary tax on companies of R7.0 billion, an increase Community Development Trust being of 97% over 2009. In addition, there are taxes which arise as a result of our operations able to use the dividends it received from which, although not a cost to Kumba, are collected by us and remitted to government. SIOC to pay for its 3% interest in SIOC in These include payroll taxes and VAT. In 2010 this amounted to R784 million, giving a full during the third quarter of 2010, six total tax footprint for the year of R9.2 billion. years earlier than originally anticipated. Based on Kumba’s share price of The group continued to generate substantial cash from its operations, with R25.6 billion generated during the year. These cash flows were used to pay the taxation, new mining R425 on 31 December 2010 this royalties of R1.4 billion, aggregate dividends of R8.6 billion (representing a 24% return shareholding is valued at over to shareholders for 2010) and capital expenditure of R4.7 billion during 2010. R5 billion. All future dividends earned by the trust’s shareholding will be available The development of Kolomela Mine is well advanced in terms of key deliverables. for community development. Overall project progress is at 81% with the project remaining on budget and on schedule to deliver initial production at the end of the first half of 2012, ramping up to The SIOC Employee Share Participation full capacity of 9Mtpa in 2013. To date, 22.6Mt of waste material has been pre-stripped. Scheme (or Envision as it is commonly 18.6Mt of this material was stripped during 2010 at a cost of R793 million which has known) was implemented to provide been capitalised. R8.5 billion capital expenditure was approved for the development of (i) an incentive and retention initiative the Kolomela Mine, of which R5.3 billion of capital expenditure has been incurred to date to employees who are permanently and a further R1.2 billion had been committed as at 31 December 2010. The project employed by SIOC in South Africa and is already providing employment for some 555 employees (2009: 262 employees) who do not participate in the other increasing to over 1,000 as the project ramps up. share schemes of the group and (ii) for the promotion of black economic The cost of goods, materials and services purchased for the year amounted to empowerment through an increase in R7.3 billion, a 28% increase over the R5.7 billion spent in 2009. broad-based and effective participation During 2010, we paid R2.3 billion in salaries and other benefits: in the equity of SIOC by historically disadvantaged South Africans. The Salaries and other benefits acquisition of the 3% interest in SIOC 2010 2009 % by Envision was funded by Sishen Iron Rm Rm change Ore Company in terms of a contribution agreement. The scheme will have a first Sishen Mine – Northern Cape 1 399 1 135 23 term of five years and contemplates a Kolomela Mine – Northern Cape 109 44 148 second term on the same basis as the Thabazimbi Mine – Limpopo 227 267 (15) first term, starting on the expiry of the first Corporate and offshore 549 412 33 term. Envision holds SIOC shares for the Total 2 284 1 814 26 benefit of employee beneficiaries, who in turn have been allocated units notionally Salaries and benefits were made up as follows: linked to the SIOC shares (underlying shares). Employee beneficiaries of Breakdown of salaries and benefits Envision receive a portion of all dividends 2010 2009 % received by Envision from SIOC in Rm Rm change respect of the underlying shares (totalling R988 million since inception of the Salaries and wages 1 883 1 508 25 scheme in November 2006) and the Pension and medical 195 164 19 remainder used to settle the original Share-based payments 206 142 45 acquisition funding. To date R215 million Total 2 284 1 814 26 of the total dividends has distributed to employees to date and R773 million As part of the unbundling from the then Kumba Resources Limited in 2006, Kumba utilised to repay the original funding and implemented various transactions in which 26% ownership in SIOC was transferred to interest thereon. A capital distribution Exxaro Resources (20%), SIOC Community Development Trust through a SPV (3%) will be made to employee beneficiaries and Envision, our broad-based employee share participation scheme (3%). These at the end of the first term (five years). parties, along with Kumba, participate in the dividend declared by SIOC. Each employee will be entitled to receive Kumba shares which will be swapped for The following dividends have been declared since 2006: the SIOC shares using the specific price Dividends earnings ratio of Kumba and the most recent earnings of SIOC at the end of the Total Total dividend first term, alternatively to receive the cash 2006 to Rm 2010 2010 2009 2008 2007 2006 value of the Kumba swapped shares.

Dividend declared by SIOC 32 939 13 982 6 295 9 040 3 266 356 Kumba generated its revenue through Kumba 24 376 10 348 4 658 6 690 2 417 263 the sale and transportation of iron ore to customers in the following regions: Exxaro 6 585 2 796 1 259 1 808 653 69 SIOC Community 989 419 189 271 98 12 Development Trust Envision 989 419 189 271 98 12

Economic review Responsibility Report 2010 Kumba Iron Ore Limited 41 Breakdown of revenue (2010) HSDA DISCRETIONARY SPEND 2010 PER MINE (%) 2010 2009 5.65 Rm Rm

24.15 Total revenue 38 704 23 408 Domestic 2 874 1 359 Export 35 830 22 049 China 23 112 16 770 Rest of Asia 7 465 3 128 9.82 Europe 4 896 2 151

60.38 Middle East 300 – South America 57 –

Head office Kumba achieved record revenues of R38.7 billion in 2010, up 65% year-on-year. This Sishen Mine increase in revenue was driven by: Kumba realising a 92% weighted average increase in Thabazimbi Mine export iron ore prices for the group; the sale of 33% of our exports at index prices; and Kolomela Mine the move to the negotiation of prices on a quarterly basis. In addition, we increased our export sales volume by 6% or 1.9Mt on which these higher prices were realised. ENTERPRISE Our domestic sales remain dependent on the off-take requirements of ArcelorMittal. DEVELOPMENT DATA PROCUREMENT Of the R13.7 billion Kumba spent during 2010, R9.4 billion was discretionary of which 26 R3.6 billion or 39.10% was spent with BEE suppliers. This is an increase from the previous two years both in absolute and proportional terms. This increase is in line NUMBER OF BUSINESSES with our policy which recognises local procurement as of strategic importance to the company. It plays a key role in securing and maintaining the right to mine, developing ESTABLISHED 2008 – 2009 thriving communities, creating efficiencies in the supply chain and ensuring reliable 11 access to supplies. Key procurement data NUMBER OF BUSINESSES Total Total discretionary BEE % BEE ESTABLISHED 2010 payments payments payments of discretionary

2008 9 011 364 572 5 980 401 982 2 154 532 983 36.03 316 2009 12 535 484 593 8 577 336 577 3 160 601 934 36.85 2010 13 765 397 014 9 401 107 477 3 675 679 142 39.10 JOBS CREATED In order to strengthen its preferential procurement drive and exceed its mandatory R10.7 million obligations, Kumba has a number of initiatives in operation. These include the implementation of a local supplier development strategy and a concerted effort to verify the BEE status of existing suppliers. By 2014, Kumba aims to procure 40% of its LOANS PROVIDED 2008 – 2009 capital requirements, 50% for consumables and 70% of its services from BEE suppliers. Furthermore, Kumba is establishing a preferential procurement transformation R4.8 million committee which will monitor progress in terms of meeting the targets. Kumba will be advertising some of its tenders on the DMR website. These will be ringfenced and only open to HDSA suppliers. LOANS PROVIDED 2010 SUPPLY CHAIN AND SUSTAINABLE DEVELOPMENT R54 million Preferential procurement is a significant component of the supply chain and sustainable development policy. However, there are other factors including safety, health and SMALL BUSINESS TURNOVER environmental issues which contractors need to be aware of. Kumba will be attaching a 2008 – 2009 questionnaire to tenders such that potential service providers can provide Kumba with information on their SHE management practices, in addition to questions relating to R28.6 million BEE. This ultimately forms part of a broader supplier development strategy.

SMALL BUSINESS TURNOVER 2010 R5,8 million

LOANS REPAID

42 Kumba Iron Ore Limited Responsibility Report 2010 Economic review ENTERPRISE DEVELOPMENT development activities are driven Coordinated by Kumba’s Social out of the small business hub and Community Development at Kathu but increasing activity Department, in collaboration is expected from Postmasburg, with Anglo American Zimele (the where Kolomela Mine is located, small business development once the mine ramps up to full arm of Anglo American www. production. anglozimele.co.za), enterprise Kumba’s enterprise development development is regarded as an programme fits well with its important component of creating vision for the post-mining viable local economies, increasing landscape. It anticipates that the employment, and helping people efforts expended in enabling the to achieve their goals by providing creation of these businesses will funding for the establishment of last beyond the life of its mines. small and medium businesses, advice on business planning and Some of the new businesses ongoing mentoring. established include the following: • Butterland Bakery in Over the last few years, 37 new Thabazimbi. businesses were established which created 360 permanent • Hydroponics farming supported jobs, and generated R29 million in by Kolomela – the project turnover during 2010 (see data on received a recognition award in opposite page). Through Kumba’s the district for best agricultural mentorship programme, 340 project in its category. small and medium enterprises Employees of Kalahari Verspreiders, • Commercial Poultry Farming. were assisted and advised. a small enterprise supported through Kumba’s enterprise development Much of Kumba’s enterprise • Upgrade at Boichoko Bakery. programme

SUCCESS STORIES

SISHEN MINE facilitated by Sishen Mine’s Social the building, purchase equipment and Community Development and consumables. Kumba also Tenders were issued in Department and Anglo American appointed a consultant to assist September 2010 for the Zimele, was awarded a contract the newly formed company with construction of caucus rooms for to provide gardening services to their business plan. the mining operations section. Sishen Mine. Booi Holdings, a black-owned Kolomela Mine’s procurement section entered into negotiations local supplier, was awarded KOLOMELA MINE the tender beating five other with Dirt Friends to provide suppliers for the job. In collaboration with Kolomela the abovementioned services Mine, the Tsantsabane Local at market related prices. After Another tender for the Municipality identified the need negotiations, Kolomela Mine construction and expansion of for a complete change-house entered into a two-year contract offices for the mining production service which includes laundry with Dirt Friends. A company division was issued in October services and the cleaning of with 100% BEE credentials were 2010. Ekhayalitle Construction, a ablution facilities. This project was created and established through local black-owned supplier, was included in the Kolomela Social this initiative. the successful tenderer. and Labour Plan. The municipality Tsimo Gardens, a nursery and provided the building, identified gardening business in Kathu, the beneficiaries while Kumba whose establishment was provided the funding to renovate

Economic review Responsibility Report 2010 Kumba Iron Ore Limited 43 SOCIAL AND COMMUNITY DEVELOPMENT REVIEW

44 Kumba Iron Ore Limited Responsibility Review 2010 Social and community development review Children at an early childhood development centre which Kumba supports

Social and community development review Responsibility Review 2010 Kumba Iron Ore Limited 45 SOCIAL AND COMMUNITY DEVELOPMENT REVIEW

STAKEHOLDER SANCTION Social and community development (SCD) is coordinated by Kumba’s SCD Department. Previously, SCD was managed by a combined Kumba has long known that its environment and SCD department. During the year, the two were social and community development separated, with environmental again combining with safety and falling programme is a core pillar of under the leadership of the new safety and sustainable development its strategy. The sanction of executive. A corporate manager for SCD was appointed, reporting to the local people, businesses and public affairs executive. government is extremely important to the company. The SCD Department is responsible for meeting Kumba’s social and labour plan commitments, specifically local economic development in the sense of the Mining Charter (the revised charter calls for the company to “conduct ethnographic community consultative and collaborative processes to delineate community needs analysis” which will be measured by the implementation of community approved projects). In addition to being directly responsible for local economic development at the operational level, the SCD Departments at each mine are responsible for ensuring that each mine meets its SLP commitments by engaging with the relevant departments. In other words, the SCD departments are the custodians of the SLPs at each mine. The SCD function extends beyond the compilation and execution of social and labour plans. In fact, much of Kumba’s development work is not guided by the SLP. Kumba chooses to regard its SCD programme, whether SLP or not, as part of the same commitment to South Africa, A MULTI-PRONGED irrespective of whether the budget is for SLP or not. Furthermore, the APPROACH way in which Kumba decides what projects to support is the same irrespective of who or what the project is for. Kumba is committed to Kumba’s social and community supporting development programmes and projects that are based on development interventions focus good research and that are suitable and necessary for the people and on improving local infrastructure, areas for which they are intended. Support is provided for education, facilitating the establishment of skills development, enterprise development (discussed in the economic small and medium enterprises, review section, page 38), infrastructure and health and welfare. The improving education and health SCD Department is also closely involved with the Dingleton relocation services, increasing community (refer to page 20). safety and alleviating poverty.

46 Kumba Iron Ore Limited Responsibility Report 2010 Social and community development review STRATEGY AND MANAGEMENT The SCD Department improved the process whereby projects are identified and supported. The revised process consists of six steps, as follows: • Strategy development, target setting and business planning: new opportunities will be assessed in line with legislative requirements, IDP requirements and internal guidelines. Input into projects will be sought from relevant business units within Kumba as well as from the Anglo American Social Performance Unit. The strategy will be approved annually and individual projects subject to approval by the appropriate approval authority. • Planning and budgeting: projects will be identified at various forums e.g. educational, LED, SLP negotiation, environmental, skills development, etc. Projects which fit with Kumba’s strategy will then be formally registered for further investigation. • Project review: the SCD project review committee will meet monthly to review all project plans for approval and further action. • Approval and release of funds: recommended projects will be forwarded to designated signatories for final approval and release of funds. • Project implementation: this phase deals with the implementation of the approved project plan and requires the establishment of a performance framework. The project will be reviewed, monitored and evaluated on an ongoing basis. • Project closure: the project is handed over to the beneficiaries at a formal launch or handover function. After sufficient time has elapsed, the project should be assessed to determine whether the benefits were delivered and what the project impact was. Lessons learnt should be captured for future reference and shared with other operations.

Kumba’s social and community development strategy and focus areas:

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Social and community development review Responsibility Report 2010 Kumba Iron Ore Limited 47 SOCIAL AND COMMUNITY THE ANGLO SOCIAL WAY draft of the plan which is being reviewed 2010 DEVELOPMENT SPEND During the year, ABAS conducted audits internally. Projects identified in Sishen SISHEN MINE (R million) at Sishen and Thabazimbi Mines to Mine’s updated SLP will first be pre- approved by a special mining sector

62.0 determine compliance with the Anglo Social Way. subcommittee of the JTG District Municipality. Sishen Mine, and other Results from the self-assessment and local mining operations, commissioned the ABAS review performed indicated a widespread LED and SMME review of that Sishen and Thabazimbi Mines have operations of the Northern Cape. The processes in place to assist in addressing research, which has been submitted to compliance in line with the Anglo the committee, will aid in the identification Social Way. Overall, Kumba received a of suitable projects for local mines to 6.9 4.3 4.2 moderate rating as there were some non- support. This means that the identified compliances at the operations. Health Community Other Donations projects in the SLPs will be supported by development Moderate non-compliance issues a clear need on the ground. Of course, included contractor social impact all SLP reviews will take into account management processes not being the requirements of the revised SOCIAL AND COMMUNITY Mining Charter. 2010 DEVELOPMENT SPEND fully implemented at both operations THABAZIMBI MINE (R million) and Thabazimbi Mine’s community

8.7 engagement plan not being fully aligned SPEND to the Socio-economic Assessment Kumba’s combined SCD spend for Toolbox (SEAT). It was recommended the year was R134 million. This figure that more vigorous cost control includes monies spent on infrastructure measures regarding CSI spend should be projects. implemented at theThabazimbi Mine. All three operations will be undergoing PROJECTS SEAT II processes due to commence in Kumba supports a range of

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Donations Sports, art, Community Education local infrastructure, facilitating the culture and development and training SOCIAL AND LABOUR PLAN establishment of small and medium heritage REVIEW enterprises, improving education and Sishen and Thabazimbi Mines will be health services, increasing community SOCIAL AND COMMUNITY preparing new social and labour plans safety and alleviating poverty. Kumba’s 2010 DEVELOPMENT SPEND for the period 2012 – 2016. Sishen Mine KOLOMELA MINE (R million) flagship projects are shown below. has already updated and completed a 29.8

Category Project

Infrastructure • Paving and tarring of Regorogile Ext 5 road (Thabazimbi Mine) • Upgrade Khuting Stormwater (Kolomela Mine) • Construction of Stasie Street (Kolomela Mine) • Upgrade of bus and taxi terminus (Kolomela Mine) 6.5

Social and Community Community • Organic Honey Bee Project at Dibeng (Sishen Mine) labour plan development development commitments • Alternative Energy: Zinc Air Fuel Cells Pilot Project (Sishen Mine) • Schools Sport Development Programme (Kolomela Mine) • Business Simulation Hub (Sishen Mine)

Education and • Mabogopedie Science Laboratory (Thabazimbi Mine) training • Marakele Environmental Education Centre (Thabazimbi Mine) • Simba Kleuterliefies Early Childhood Development Centre (Sishen Mine) • EQUIP: Sishen Intermediate School (Sishen Mine)

Health and • Mobile health clinics in Kathu (Sishen Mine) welfare • Ulysses Gogi Modise Wellness Clinic (Sishen Mine) • Dingleton Soup Kitchen (Sishen Mine) • Thabazimbi Wellness Clinic (Thabazimbi Mine)

48 Kumba Iron Ore Limited Responsibility Report 2010 Social and community development review Tending to a vegetable field – an agricultural enterprise supported by Kumba

LOOKING AHEAD 2011 – 2016

Kumba’s focus for the next five requirements to make Health and welfare years is summarised as follows: institutions of quality early • Investing in health learning available to all infrastructure (clinics, mobile Enterprise development children in the communities clinics and hospitals) to • Implementation of Zimele Hub where Kumba operates, improve access to quality in Postmasburg including labour-sending healthcare • Implementation of the areas • Investigate possible Business Place franchise in investment in healthcare Skills development Thabazimbi practitioner training to assist • Capacity building programmes with capacity constraints Education for school leavers who cannot Primary infrastructure • Alignment with national afford tertiary education education priorities • Assess current programmes • Investing in primary • Key focus on Early Childhood offered in areas where the infrastructure projects Development (ECD), Grade R mines operate to determine to create a conducive and primary schools, including where improvements are environment for successful ECD and Grade R teacher required LED and SED project development programmes implementation • Addressing infrastructure

Social and community development review Responsibility Report 2010 Kumba Iron Ore Limited 49 ENVIRONMENTAL REVIEW

ENERGY page 55

Using less energy in absolute terms – fuel and electricity – and using energy efficiently are the central tenets of Kumba’s energy management programme.

WATER page 58

Kumba’s water management programme focuses on using less in absolute terms and on water- use efficiency. Kumba’s water management systems will be reviewed along the lines of the new energy management programme.

LAND AND REHABILITATION page 60

Considerable effort has been put into reviewing and revising Kumba’s waste rock dump rehabilitation strategy. Kumba’s land management strategy is now being implemented – we are committed to leaving behind legally compliant and environmentally sustainable landscapes.

50 Kumba Iron Ore Limited Responsibility Review 2010 Environmental review Kumba’s environmental management programme looks to minimise the use of natural resources and to conserve them – in this case soil

Environmental review Responsibility Review 2010 Kumba Iron Ore Limited 51 FOCUSING ON OUR ENVIRONMENT CARING FOR OUR FUTURE

USING LESS This section reviews Kumba’s environmental performance. For a Environmental management discussion on dewatering and groundwater pollution, refer to entails reducing the consumption page 24. of resources, limiting wastage, and Kumba aims to minimise and mitigate the environmental impact of preventing pollution and other forms its operations by taking a systematic and disciplined approach and of degradation. This is accomplished applying comprehensive risk-based techniques that directly inform with the aid of technology. its strategic initiatives and plans. During 2010, Kumba focused on the

management of the following environmental aspects: energy and CO2 UNPOLLUTED emissions; water; land, with specific focus on farms reserved for future ENVIRONMENT mining, remediation of historical contamination, and waste rock dump rehabilitation; and compliance to legal and other requirements (refer to page 62).

ENVIRONMENTAL MANAGEMENT PROGRAMME Sishen, Thabazimbi and Kolomela mines have approved Environmental Management Programme Reports (EMPRs) issued by the Department of Mineral Resources (DMR). As and when activities are changed or new activities added, the EMPRs are amended and submitted to the DMR for approval. In order to satisfy the requirements of Regulation 55 of the Mineral Petroleum and Resources Development Act (MPDRA, 2002) and Regulation GN 704, the mines undertake annual performance assessments against commitments made in the EMPRs for submission to the DMR. As part of mine closure plans, extensive physical and LAND MANAGEMENT financial assessments are conducted to address requirements of the Kumba owns substantial tracts MPRDA in relation to financial provisioning for mine closure. of land, the management of A comprehensive rehabilitation strategy for Sishen Mine was which is an important part of developed in 2010. The strategy considers possibilities for concurrent its environmental management rehabilitation, the issuing of a bank guarantee to DMR for Sishen strategy. Mine, the provision of Thabazimbi Mine’s shortfall into the Kumba Rehabilitation Trust Fund as agreed with DMR, and the acquisition of an LAND integrated water-use licence for Thabazimbi Mine. STEWARDSHIP Environmental management is an integral part of the way we operate and is not confined to a single department within the company. For example, energy and water consumption and efficiency, plus greenhouse gas emissions, are championed by the Technical Department.

52 Kumba Iron Ore Limited Responsibility Review 2010 Environmental review STRATEGIC CONSIDERATIONS ENVIRONMENTAL Kumba believes that a well-conceived and executed environmental strategy STRATEGY provides a competitive advantage. The environmental strategy aims to The environmental strategy position the company as a proactive responsible corporate citizen which aims to position the company acts beyond legislative compliance. In 2010 we identified five priority areas as a proactive and responsible using a risk-based approach and global trends, for management attention. corporate citizen which acts Our strategic approach compels us to invest more in pollution prevention beyond legislative compliance. technologies, strategic partnerships, collaboration with government and other key stakeholders, and less on clean-up technologies.

There are some areas, for example acquiring the applicable licences for certain activities affected by recent changes in legislation, where we are still working towards the achievement of full legal compliance.

Our 2011 environmental management priorities and focus area are summarised as follows:

Priority 1: Energy and CO2 emissions management • Monitoring, measuring, reporting and target setting in line with outcomes of the Copenhagen Conference and the Anglo American strategy • Gap analysis using the Anglo American Group Technical Standard for energy and greenhouse gas emissions as a benchmark • Implementation of energy saving and energy efficiency projects Priority 2: Water management • Monitoring, measuring, reporting and target setting PLAN-DO-CHECK-ACT • Gap analysis using the Anglo American water technical standard as Kumba’s environmental a benchmark management systems are • Implementation of water saving and water efficiency projects based on ISO 14001 and are certified accordingly. The system’s Priority 3: Assurance plan-do-check-act logic informs • Licensing of listed activities and compliance to obligations the implementation of Kumba’s • Stakeholder management environmental management • Audits, reviews and self-assessments programme. • Monitoring and reporting Priority 4: Remediation and pollution prevention • Remediation of historical impacts • Training and awareness • Gap analysis on pollution prevention • Preventing pollution Priority 5: Land management and biodiversity • Implementation of approved land uses on Kumba-owned farms • Updating closure costing and closure plans • Implementation of biodiversity action plans • Physical rehabilitation of waste rock dumps

Environmental review Responsibility Review 2010 Kumba Iron Ore Limited 53 Significant quantities of energy are used during blasting

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54 Kumba Iron Ore Limited Responsibility Review 2010 Environmental review ENERGY

CHANGE IN APPROACH The first phase of the strategy is focused NEW APPROACH Kumba is realigning its energy on becoming disciplined and includes the The new programme is used to develop management programme to align with following elements: “bottom-up” site energy and carbon Anglo American’s revised requirements. • Roll out of a metering, monitoring, targets. A business as usual (BAU) Kumba originally committed to different reporting, target setting and baseline is established looking at energy savings targets with regards to energy verification programme that will consumption/carbon emissions from the efficiency incorporating targets set by determine carbon and energy present with a forecast to 2020. This BAU the Energy Efficiency Accord, by Eskom performance management standards baseline must take into consideration and targets set internally. The main and will be used to set targets factors such as the life-of-mine plan, target was determined by the Energy • Ensuring that the cost of carbon increase in production and increase in Efficiency Accord, as follows: energy informs business decisions activities that will result in higher energy and CO2 targets are reductions of 1.5% • Using regional climate models consumption/emissions. and 1% per annum respectively over a to identify key site adaptation The site carbon abatement cost curves 10-year period based on 2004 energy requirements must be established taking into account consumption. • Evaluating value-added services, opportunities in: These targets were set without including synergy and product market • energy efficiency taking changing mine conditions into risks and opportunities • asset optimisation and supply chain consideration. Intensity targets meant if • Cooperating with government and • new technology and synergy projects consumption increased through factors industry to examine responsible • carbon offsets other than increasing final product, the carbon policies. targets could not be met. The operations The next phase – the proactive period – is These results can then be used to tried to manage this by introducing the medium term focus of the strategy determine what savings will be possible baseline modifications using the footprint where piloting inroads on carbon and and the cost implications thereof and the model. The model was used to modify energy savings should become the information can be used to set a realistic consumption by adding factors of norm. Therefore the focus will be on new site specific target. production and uncontrollable variables techniques and new technologies. Key If energy and emission savings targets (e.g. haul distance, stripping ratio, yield). elements of this period will be: are set from the top down, the new Efficiency improvements became programme can be used to: demonstrable. • Use of carbon markets to minimise cost of compliance • determine the least cost option Unfortunately the model had Factoring of climate adaptation • to meet disadvantages: measures into business plans (a) the site targets and Formation of low-carbon technology • It needed to be constantly adjusted to • (b) the group’s indicative carbon partnerships with key stakeholders factor in changes at the operational target • Implementation of carbon offset level • determine the site and BU cost projects • The model only allowed for one implications and/or incentives Investing in energy and carbon uncontrolled variable per operational • required to achieve targeted energy saving projects. area and carbon savings • The above resulted in savings being The final phase, building resilience, is the lost when too many operational long-term focus of the strategy where changes took place breaking new ground will take place. Key Based on these and other factors, elements are as follows: Anglo American decided to develop • Partnering with stakeholders on a clear policy and strategy on energy carbon reducing projects and climate change. Initial focus will • Embedding carbon and energy be on performance improvement, savings culture in the workforce followed by innovation in order to reduce • Investing in low carbon technology consumption and emissions. innovation.

Environmental review Responsibility Review 2010 Kumba Iron Ore Limited 55 Energy consumption data 2009 and 2010

2009 2010 2010 Fuels Electricity Fuels Electricity Total Operation consumed purchased consumed purchased energy use

Sishen 3 128 572 GJ 1 526 461 GJ 3 781 282 GJ 1 704 514 GJ 5 485 796 GJ Thabazimbi 300 397 GJ 108 315 GJ 420 383 GJ 101 174 GJ 521 557 GJ Kolomela 0 0 336 372 GJ 21 553 GJ 357 925 GJ

Total 3 428 969 GJ 1 634 776 GJ 4 538 037 1 827 241 6 365 278

Performance 2004 – 2010 ENERGY CONSUMPTION (GJ) AND TONNES ORE PRODUCED The total amount of energy consumed Gigajoule Tonnes ore by Kumba in 2010 is higher than that 8 000 000 50 000 000 consumed during 2009. The total 43 374 982 42 298 046 absolute consumption increased during 36 265 639 40 000 000 6 000 000 the year. This increase is due to the 32 363 092 31 391 977 increase in waste stripping which took 30 249 133 31 001 580 30 000 000 place at all three operations. Thabazimbi 4 000 000 Mine is in the process of opening a new 20 000 000 pit and Kolomela Mine was included in

2 000 000 the energy performance reporting for the 10 000 000 first time in 2010. Energy efficiency for the year was 0.147 gigajoule per tonne of 0 0 2004 2005 2006 20072008 2009 2010 ore produced (2009: 0.120).

Consumption ELECTRICITY SAVING Tonnes ore INITIATIVES

2004 – 2010 ENERGY CONSUMPTION (GJ) AND ENERGY INTENSITY (GJ/TONNES ORE) Dust suppression

Gigajoule Tonnes ore Installation of a new dust suppression 7 000 000 0.16 0.147 system started in early 2010 at Sishen 0.12 6 000 000 0.14 Mine . Altogether 83% of the anticipated 0.12 0.12 0.118 electricity savings from this project 0.11 0.12 5 000 000 0.108 were realised by the end of the year. 0.1 4 000 000 The savings were as a result of the new 0.08 suppression system having smaller 3 000 000 0.06 motors than the old extraction system. 2 000 000 The final units will be fully commissioned 0.04 by the end of January 2011. Upon 1 000 000 0.02 verification of the savings, Kumba will 0 0 receive up to R2 million of funding 2004 2005 2006 20072008 2009 2010 from Eskom as part of its demand-side

Consumption management programme. Intensity Solar water heating Sishen Mine is installing solar water heaters (SWH) as part of its hostel conversion process. A total of 77 units were installed during the second half of 2010. Energy savings realised from the installation do not accrue to the mine, but the carbon emissions saved will be offset from the mine’s carbon footprint. Eskom will recognise the energy savings when negotiating for electrical supply for growth projects as they recognise savings achieved outside of the mine environment. The calculated savings have not been verified but are estimated to be about 140 525kWh per annum or

144 740 tonnes of CO2 per annum.

56 Kumba Iron Ore Limited Responsibility Report 2010 Environmental review Heat pumps Installation of heat pumps at the GREENHOUSE Thabazimbi Mine change houses was completed during the year. Measurement and verification of the savings will be GAS EMISSIONS done in early 2011. Eskom agreed in a meeting held in December 2010 to partially fund heat pumps at the Sishen Performance Mine change houses. This project will start in 2011. Greenhouse gas (GHG) emissions increased at Kumba in 2010 mainly as a result of the increase in waste stripping and the resultant increase in energy consumption. GHG intensity increased marginally from 0.017 tonne CO /tonne in 2009 to LED lighting 2 0.019 tonne CO /tonne during 2010. LED lights were investigated in 2008 but 2 high capital cost and poor light output Operation CO2 from CO2 from resulted in a decision not to continue with fossil fuels electricity purchased this technology. Due to improvements Sishen Mine 265 353.79 487 680.28 in LED technology, a decision was made in 2010 to look at it again. LED lights Thabazimbi Mine 29 483.51 28 946.95 from two different manufacturers were Kolomela Mine 23 613.60 6 166.54 installed in offices at Sishen Mine for Total 318 450.90 522 793.77 testing. Evaluations showed that the new generation LED lights supply adequate lighting. Eskom agreed to provide 2004 – 2010 TONNES CO2 EMITTED AND TONNES ORE PRODUCED partial funding for the installation of LED Tonnes CO Tonnes ore lighting. 2 900 000 50 000 000 43 374 982 Dense medium separation (DMS) 800 000 42 298 046 36 265 639 40 000 000 plant simplification 700 000 31 391 977 32 363 092 600 000 30 249 133 31 001 580 In 2009 the standard lump ore DMS 30 000 000 500 000 flow line of the plant at Thabazimbi 400 000 Mine was simplified by combining the 20 000 000 dense medium and densifier lines and 300 000 by removing some equipment from 200 000 10 000 000 the diluted medium line. A unique 100 000 arrangement was used to feed the 0 0 densifier by gravity. This has reduced 2004 2005 2006 20072008 2009 2010 ferrosilicon consumption, water Tonnes CO2 consumption and energy consumption. Tonnes ore The same modification is currently under way in the fine ore line in the cyclone 2004 – 2010 CO EMITTED (TONNES) AND CO INTENSITY (TONNE/TONNE ORE PRODUCED) plant. Possible savings will be quantified. 2 2

Tonnes CO2 CO2/Tonnes ore Diesel savings initiatives 900 000 0.019 0.02 800 000 0.017 0.018 The Diesel Energy Efficiency 0.016 0.016 0.016 0.015 0.015 0.016 Management System (DEEMS) contract 700 000 0.014 was renegotiated and renewed in 2010. 600 000 0.012 The system was used during 2010 to 500 000 0.01 track diesel performance and to log and 400 000 0.008 track interventions. The DEEMS system 300 000 0.006 is reporting a saving of 1 494 693 litres 200 000 0.004 for the year 2010. 100 000 0.002

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Environmental review Responsibility Report 2010 Kumba Iron Ore Limited 57 WATER

Kumba’s water management strategy is • Construction of a clean water • Improvement of controls on the informed by the intention to ensure all reservoir – conceptual stage. density of slimes being pumped to operations practice locally responsible • Additional water storage for process the slimes dams water stewardship. While aligned to water – conceptual stage. Improvement in the efficiency of Anglo American’s overall and long-term • drying bins goals for water stewardship, local and incremental saving targets will be built THABAZIMBI MINE • Infrastructure for making increased bottom up, taking into consideration Thabazimbi Mine received its water-use use of treated effluent from municipal the presenting catchment water stress licence in October 2010. waste water treatment works conditions. Apart from efficiencies or The 2010 target of 540 l/t was not water-use intensities, consideration is achieved with average water-use KOLOMELA MINE given to reusing, recycling and water intensity for 2010 being measured at an harvesting. The dewatering infrastructure at average of 802 l/tonne. Thabazimbi’s Kolomela Mine is in the final stages of disappointing water intensity was commissioning. During the year SISHEN MINE attributed to old infrastructure, lower 1 226 000 m3 of water was exported by Sishen achieved the previous year’s water than planned production, challenges the mine to the Sedibeng Water Board. use intensity target. At the beginning of with slimes density and associated The water was extracted as part of the 2010, a target was set to achieve a saving return water facilities. The mine is in the mine’s dewatering programme. of 2.5% improvement on the previous process of implementing measures to year’s water-use efficiency. The target for reduce water consumption and improve All of Kumba’s operations have Sishen translated to 175 l/t on average efficiencies. BQQSPWFE
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QMBDF The total water consumption at at 169 l/t. The mine achieved its target Thabazimbi Mine for 2010 was in the with an average intensity of 169 l/t for order of 2,06 giga litres (or an average the year. The total water consumption for use of 5,6 Ml per day). mining and beneficiation purposes was in the order of 7,48 giga litres, amounting to Several projects are under way to reduce an average use of 20,5 Ml per day. water consumption at Thabazimbi Mine. A number of water savings initiatives These include: are under way at the mine, including the following: • Upgrading of water metering systems • Installation of automated water meter • Slimes dam return water system loggers to provide extra information upgrade about water flows in the pipe network. • Upgrade of plant water recovery • Improvement of dust suppression system methods on mining haul roads • Construction of a dirty water reservoir • Installation of auto shut-off valves in – prefeasibility stage. the washing and screening plant

PRIMARY WATER CONSUMPTION 2007 – 2010 (million m3) 9.7 8.7 8.3 8.0

2007 2008 2009 2010

58 Kumba Iron Ore Limited Responsibility Report 2010 Environmental review Kumba’s plants are designed to use water efficiently

Environmental review Responsibility Report 2010 Kumba Iron Ore Limited 59 LAND AND REHABILITATION

Land management at Kumba LAND MANAGEMENT The entire Thabazimbi Mine is located encompasses three interconnected Kumba has developed an integrated on a farm, part of which is mined and elements: waste rock dump rehabilitation, approach to identifying potential the remainder of which is used for the management of land other than that environmental and social impacts of new nature conservation purposes. A lodge used for mining, and closure planning and projects. The approach is intended to located within the Ben Alberts Nature financial provision. improve consistency and effectiveness Reserve, situated on mine land, is being in mitigating such impacts. It also applies converted into a tourist facility which will to projects that seek access to sensitive endure post-closure (current life-of- WASTE ROCK DUMP mine extends until 2016). A detailed risk REHABILITATION areas. Thabazimbi and Sishen Mines have biodiversity action plans (BAPs) which assessment was completed in this regard. Sishen Mine revised its rehabilitation were peer reviewed by Anglo American. Kolomela Mine is compiling a strategy based on the need for a new Both mines are addressing the findings comprehensive biodiversity management approach to rehabilitation. Specific of the peer reviews. At Kolomela Mine, programme for completion during 2011, focus is placed on the identification of potential impacts on sensitive areas, the outcomes of which will be integrated areas that can be rehabilitated before such as pans, have been identified and into the final approved land use plan. mine closure and the formulation of mitigation plans have been developed a methodology that will maximise to conserve or restore areas that will be During 2011 Anglo American and opportunities for concurrent impacted upon. Fauna and Flora International will rehabilitation. conduct a review of the BAPs of During the year, Sishen Mine compiled a Sishen and Kolomela Mines, due to A task group was established during Biodiversity Action Plan to be used in part the sensitivity of some areas within the 2010 to investigate the best practicable to manage those areas of mine mine, and to implement and incorporate means of maximising rehabilitation land that are earmarked for low intensity recommendations from the review into opportunities at Sishen Mine and game farming. These areas include the BAP. to develop a comprehensive the mine’s eastern farms Lylyveld and rehabilitation strategy. Key outcomes of Sekgame, approximately 1000 ha in size. CLOSURE PLANNING AND the task team’s efforts include a SWOT All cattle, in excess of 800 animals, and FINANCIAL PROVISION analysis, a risk assessment, identification horses previously kept on this land were of rehabilitation options to be applied to sold at a public auction in August 2010 Sishen and Thabazimbi Mines developed existing dumps and to future dumps, with in line with the approved land their preliminary closure plans inline specific focus on five-year and life-of- management strategy. with the Anglo American Mine Closure mine rehabilitation options. Toolbox. Kolomela Mine will be The management and control of alien developing its preliminary closure The revised strategy will be presented and invasive species on the mine and plan during 2011. to the Kumba executive committee in on its farms continues as scheduled. Detailed closure cost estimates exist early 2011. Sign-off of the strategy is Farmworkers previously responsible for at all the mines and are reviewed on an vital given the limitations of the current livestock management now form part of annual basis. Quarterly contributions rehabilitation plan and the significant a team responsible for the eradication of are made by the mines into the Kumba increase in the closure liability costs. invasive species. The focus for 2011 is to implement the Rehabilitation Trust. A key 2010 approved rehabilitation strategy. A major biodiversity focus of the mine will milestone was the provision of the be on determining the potential impact shortfalls for both Thabazimbi and Thabazimbi Mine’s rehabilitation is the mine has on vegetation especially the Kolomela Mines, which was deposited progressing according to plan. The iconic camel thorn (Acacia erioloba). This into the fund as agreed with DMR, and mine’s waste rock dump rehabilitation issue was raised by stakeholders, auditors the issuing of the bank guarantee to entailed the planting of between and authorities as a concern. The mine DMR for Sishen Mine. The mine’s 7 000 and 8 000 trees, shrubs and initiated a detailed study to evaluate the closure cost estimates were audited by grasses on the waste rock dumps in the impact of mining activities on biodiversity. KPMG and action plans were developed Donkerpoort pit area. Prior to planting, Relevant stakeholders, including the to address areas of improvement. As at approximately 512 000 tonnes of local community, local farmers, research 31 December 2010, the total investment material had to be moved to prepare institutions, academia, government and held by the Kumba rehabilitation trust the area for rehabilitation. The DMR conservation agencies, were identified was R372 million. This money is set indicated satisfaction with rehabilitation and approached to form part of the aside for environmental rehabilitation results during a visit to the mine in August Biodiversity Working Group. The terms and decommissioning, as required 2010. The focus for 2011 is to continue of reference for the study was developed by law. Further details can be found on with the approved rehabilitation method by all stakeholders during 2010 and pages 36, 37, 40, 48 and 53 of the according to plan. investigations will continue during 2011. 2010 Annual Financial Statements.

60 Kumba Iron Ore Limited Responsibility Report 2010 Environmental review DUST PARTICULATE EMISSIONS

Kumba’s primary concern with regards monitoring programme which measures In 2011, the focus will be on optimising to air quality is the amount of dust total suspended particulate (nuisance the dust control programme in mining generated by its activities. The main dust) and PM10 (particulate matter areas (water truck utilisation, dust sources of dust are the plants (transfer not exceeding 10 μg/m3 of inhalable suppressants, etc.), implementing points, extraction systems, open areas dust). Air quality management plans real-time PM10 and 2.5 monitoring and roads) and mining areas (mine and (AQMP) are in place at all the mines and (residential areas and in-pit monitoring) contractor haul roads). To manage its are implemented on an ongoing basis. and proactively engaging with internal impacts and to ensure that it fulfils its Oversight for the implementation of and external stakeholders on the mine’s legal obligations with regards to dust the plans rests with operational impacts and control measures. emissions, Kumba has implemented a Dust Task Teams.

Kumba’s land management strategy involves the clearing of the swarthaak (Acacia mellifera), a species which encroaches rapidly on grazing and arable land

Environmental review Responsibility Report 2010 Kumba Iron Ore Limited 61 COMPLIANCE, CERTIFICATION AND INCIDENTS

Compliance and certification 2005 – 2010 ENVIRONMENTAL INCIDENTS Several internal and external audits (independent environmental legal compliance audit;

127 ISO 14001 certification annual audit; ABAS environmental management systems and governance) raised a number of findings mostly in regard to pending authorisations 104 from the authorities. Most of these findings will be signed off once the licences and record of decisions are issued by the relevant authorities. During the year, Kumba 71

64 focused on effective close out of agreed corrective actions for the significant findings. 60 56 The completion status per mine is as follows: • Thabazimbi Mine 92% Sishen Mine 75% 10 • 7 3 1 1 • Kolomela Mine 100% 2005 2006 2007 2008 2009 2010 • Exploration 83.33% Level 1 • Saldanha port operations 70%. Level 2 An audit team comprising Kumba and Anglo American specialists, plus an independent legal specialist, conducted comprehensive internal audits between May 2010 and September 2010 at all the mines focusing on legal compliance. Sishen Mine received complaints from local farmers questioning compliance to the mine’s own EMS. At the Environmental Forum, the mine together with the farmers appointed a consultant who presented to the stakeholders how the ISO system works and since then the issue has not resurfaced. At Kolomela Mine, a service provider for the development of the EMS, based on ISO 14001, was appointed. Implementation of the system is planned during the first quarter of 2011. The revision of the existing legal and other requirements register is also planned for 2011 with the view of making it applicable to the mine’s activities. Kolomela Mine will conduct internal audits during 2011 to assess the level of compliance of the EMS to ISO 14001 requirements. External certification by an independent body is planned for 2012.

Incidents During the year there were three level 2 incidents (see table below) and no level 3 incidents.

Details of level 2 incidents (2010) Mine Incident details Date

Sishen Mine Repeat spillage of sewage (Level 1 incident escalated to January 2010 Level 2 because of repeated occurrence) – corrective action was effectively implemented. Sishen Mine About 300 litres of diesel were spilled into the soil. The February 2010 contaminated soil was removed and the area rehabilitated. Sishen Mine About 2000 litres of oil were spilled due to the failure of a September 2010 gauge. The spilled oil was contained in a lined pit.

62 Kumba Iron Ore Limited Responsibility Report 2010 Environmental review Independent Assurance Report to the Directors of Kumba Iron Ore Limited

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Environmental review Responsibility Report 2010 Kumba Iron Ore Limited 63 MINING CHARTER SCORECARD

CATEGORY INDICATOR TARGET ACTUAL PAGE Human Adult basic education and training 78 learners 95learners enrolled 35 resource Learnerships 80 learners 118 learners in the system 35 development Career progression 100% of targeted employees on 100% of targeted employees on 35 career progression plans programmes Employment HDSA in management 48.63% 45.99 34 – 36 equity Women in core mining 9.45% 10.85 34 – 36 Women in mining 15.48% 14.41 34 – 36 Housing and Employees in hostels 68of employees to vacate hostels 100%success rate achieved 34 living conditions Local Economic Development Comply with SLP commitments Five-year LED programme on 42, (LED) programmes track 46 – 49 Development forums in major Participate at all forums Sishen, Kolomela and Thabazimbi – labour-sending areas Mines participated in local development forums and actively engaged with local municipalities and the major labour-sending areas Preferential Percentage of procurement 39% 39.10% 42 procurement spend allocated to black-owned or empowered companies HDSA Employee share scheme 3% 3%owned by Envision – ownership Community owned 3% 3%owned by the SIOC – Community Development Trust HDSA owned 20% 20%owned by Exxaro – Reporting Produce public report on Report to the public Kumba believes that this report Refer to performance against Mining complies with the requirement of previous Charter the Mining Charter reports and this report Beneficiation Kumba initiated a study to understand the current situation and growth opportunities across the steel value chain by inter alia incorporating views of other stakeholders. This information will be used to frame discussions with the relevant authorities. Furthermore, Kumba is supportive of efforts to attract a second steel producer to South Africa and the possible establishment of a pelletising and steel plant at Coega.

64 Kumba Iron Ore Limited Responsibility Report 2010 Mining charter ENVIRONMENTAL SCORECARD

2010 TARGET

PRIORITIES INITIATIVES Q1 Q2 Q3 Q4 Legacy/ Clean-up of hydrocarbon groundwater contamination historical (Sishen Mine) contamination Investigate extent of groundwater contamination by nitrates (Sishen Mine)

Investigate possible hydrocarbon pollution at Thabazimbi Mine Obtain authorities decision for storage, treatment and reuse of hydrocarbon contaminated soil (Sishen and Thabazimbi Mines) Complete shade net trails (Sishen Mine)

Finalise comprehensive rehabilitation strategy (Sishen Mine)

Compliance: Close out 60% of previous audit findings (all operations) legal and other Conduct comprehensive audits at all operations to confirm legal compliance status requirements

Apply for new licences/permits of all activities not previously licensed

Track, monitor and update compliance, especially changes in legislation

Ensure project/exploration activities are licensed and complies to licence conditions

Develop EMS: ISO 14001 at Kolomela Mine

Land Finalise land-use options for approval (all operations) management: Kumba-owned Implement approved land-use options (all operations) farms

Appoint land manager (head office)

Water Target: achieve 2.5% saving from 2009 actual saving (14%) management Identify and drive water saving initiatives

Implement water management action plan

Energy Target: achieve 9% saving on energy and 6% savings on CO2 emissions from 2004 baseline management Identify and drive energy savings initiatives

Target achieved Progress made; target will be achieved Target not achieved Progress made; target will likely not be achieved

Environmental scorecard Responsibility Report 2010 Kumba Iron Ore Limited 65 GRI INDEX

G3 INDICATOR DESCRIPTION PAGE/COMMENTS 1. Strategy and Analysis 1.1 Statement from senior decision-maker 12, 14 1.2 Description of key impacts, risks and opportunities 8 – 10, DR 27 2. Organisational Profile 2.1 Organisation’s name DR 2 – 3 2.2 Major products DR 2 – 3 2.3 Operational structure and major divisions DR 2 – 3 2.4 Location of headquarters Centurion, South Africa 2.5 Countries of operation DR 2 – 3 2.6 Nature of ownership http://www.kumba.co.za/ reports/kumba_ar07/glance_ structure.php 2.7 Markets served including geographic breakdown/sectors served/customers 41, DR 2 – 3 2.8 Scale of organisation including number of employees, net sales/revenues, total 2 – 3, DR 2 – 3 capitalisation 2.9 Significant changes during reporting period Inclusion of Kolomela Mine 2.10 Awards Accomplishments 3 3. Report Parameters 3.1 Reporting period January – December 2010 3.2 Date of previous report April 2010 3.3 Reporting cycle Annual 3.4 Contact point IBC 3.5 Process for defining report content 4 3.6 Boundary of the report 4 3.7 Limitations on the scope or boundary of the report 4 The shipping of iron ore and the impacts thereof are not addressed in this report nor the social and environmental consequeces of Kumba‘s exploration activities. 3.8 Basis for reporting on joint ventures, etc. N/A 3.10 Restatements of information None 3.11 Significant changes from previous reporting periods None 3.12 GRI Content Index table 66 3.13 Policy and practice for seeking independent assurance for report 4 4. Governance, Commitments and Engagement 4.1 Governance structure including committees 8, DR 78 4.2 Indicate whether chair of highest governance body is also an executive officer DR 80 4.3 Percent of independent directors 50% 4.4 Mechanisms for shareholders and employees to provide recommendations/engaged and DR 81 their direction to highest governance body Opinions sought through surveys, performance appraisals and via committees and informal discussions. http://www.kumba.co.za/ contact_investor.php

66 Kumba Iron Ore Limited Responsibility Report 2010 GRI index G3 INDICATOR DESCRIPTION PAGE/COMMENTS

Governance, Commitments and Engagement (continued) 4.14 List of stakeholder groups 11 4.15 Basis for identification and selection of stakeholders with whom to engage Stakeholders are engaged with based on their connection to material issues. These include stakeholders who are impacted by the company’s activities such as employees, the Dingleton community and others Economic Performance Indicators EC1 Direct economic value generated and distributed 38 EC6 Policy, practices, and proportion of spending on locally based suppliers at significant 42 locations of operation EC7 Procedures for local hiring and proportion of senior management hired from the local 34, 36 community at significant locations of operation EC8 Development and impact of infrastructure investments and services provided for public 44 – 49 benefit EC9 Indirect impacts 38 – 43 Environmental Performance Indicators EN3 Direct energy consumption by primary source 56 EN4 Indirect energy consumption by primary source 56 EN8 Total water withdrawal 58 Total water figure presented, not disaggregated by source EN9 Water sources and related habitats significantly affected by withdrawal of water 58 The impacts of the dewatering of the Sishen Mine pit are discussed on page 24. No other water sources are significantly affected by the company’s activities EN12 Description of significant impacts activities, products, and services on biodiversity in 53, 60 protected areas and areas of high biodiversity value outside protected areas EN13 Habitats protected or restored 60 EN14 Strategies, current actions, and future plans for managing impacts on biodiversity 53, 60 EN16 Total direct and indirect greenhouse gas emissions by weight 57 EN17 Other relevant indirect greenhouse gas emissions by weight Kumba does not emit other greenhouse gases EN21 Total water discharged by quality and destination Zero EN22 Total weight of waste by type and disposal Hazardous waste sent to landfill : 340.49 tonnes Non-hazardous waste sent to landfill: 2713.52 tonnes EN24 Weight of transported, imported, exported, or treated waste deemed hazardous under the Kumba does not transport terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste hazardous waste shipped internationally

GRI index Responsibility Report 2010 Kumba Iron Ore Limited 67 GRI INDEX

G3 INDICATOR DESCRIPTION PAGE/COMMENTS

Social Performance Indicators LA1 Total workforce by employment type, employment contract, and region 2 – 3, 34 – 36 Not reported by employment type, employment contract, and region LA2 Total number and rate of employee turnover by age group, gender and region 35 Not reported by age group, gender and region LA3 Benefits 35 – 37 LA4 Percentage of employees covered by collective bargaining agreements 36 LA7 Health and safety rates 18, 32 LA8 Programmes to assist employees, families, or community members regarding serious 32 – 33 diseases LA10 Average hours of training per year per employee by employee category 35 Average of 46 hours of training/employee/year LA11 Programmes for skills management and lifelong learning that support the continued 35 – 36 employability of employees and assist them in managing career endings HR6 Operations identified as having significant risk for incidents of child labour, and measures Zero taken to contribute to the elimination of child labour Kumba believes that child and forced labour (HR7) do not pose risks to its operations given the protection afforded by the South African legal environment. HR7 Operations identified as having significant risk for incidents of forced or compulsory labour, Zero and measures to contribute to the elimination of forced or compulsory labour HR9 Total number of incidents of violations involving rights of indigenous people and actions Zero taken SO1 Nature, scope, and effectiveness of any programmes and practices that assess and manage 20, 26, 42, 44 the impacts of operations on communities, including entering, operating, and exiting SO6 Total value of contributions to political parties, politicians, and related institutions Zero SO7 Total number of legal actions for anticompetitive behaviour, anti-trust, and monopoly Zero practices and their outcomes SO8 Monetary value of significant fines and total number of non-monetary sanctions for Zero non-compliance with laws and regulations PR2 Total number of incidents of non-compliance with regulations and voluntary codes Zero concerning health and safety impacts of products and services during their lifecycle, by type of outcomes PR4 Total number of incidents of non-compliance with regulations and voluntary codes Zero concerning product and service information and labelling, by type of outcomes PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning Zero the provision and use of products and services DR Board of Directors’ Annual Report IBC Inside back cover IFC Inside front cover

68 Kumba Iron Ore Limited Responsibility Report 2010 GRI index KUMBA IRON ORE ADMINISTRATION

Feedback and queries on this report should be directed to: Anel Marais Manager: Social and Community Development Email: [email protected] Communications: Gert Schoeman Investor relations: Esha Brijmohan Employment equity: Kobus Meyer Employee relations: Marius Mattee Energy: Christo Oliver Environment: Rodgers Mundembe Social and community development: Anel Marais Occupational health and safety: Alex Mgadzah Preferential procurement: Susan van der Walt Skills development: Neels de Jager Training and talent management: Kobus Meyer Water: Tom Verbeek Corporate Office: Centurion Gate – Building 2 124 Akkerboom Street Zwartkop Extension 22 Centurion, Pretoria 0046 Republic of South Africa Tel: +27 (0) 12 683 7000 Fax: +27 (0) 12 683 7009 www.angloamericankumba.com KUMBA IRON ORE Centurion Gate 2B 124 Akkerboom Street Centurion 0157 www.angloamericankumba.com

Real Mining. Real People. Real Difference.